(Bloomberg) -- Donald Trump's $1.4 billion crypto windfall has become the biggest obstacle to passing his sweeping digital-asset legislation as Democrats demand tougher language to prevent the president from profiting off an industry his administration regulates.
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Senate Republicans released a proposal this week intended to break a months-long impasse over the bill, known as the Clarity Act. But Democrats and consumer watchdog groups dismissed the terms almost immediately, complaining the bill would not stop Trump or his family from continuing to profit from his memecoin and other crypto ventures.
Trump needs the support of at least seven Senate Democrats to pass the legislation, which would set rules for digital assets. Ethics has emerged as the biggest, though not the only, sticking point.
"It's the linchpin," said Senator Angela Alsobrooks, a Maryland Democrat and key negotiator who has been supportive of the crypto industry.
A spokesperson for the White House didn't immediately respond to a request for comment. The White House has consistently said Trump is not involved in managing the family's crypto ventures and has denied conflicts of interest.
Democrats have specifically taken issue with a provision that would leave Trump's Justice Department as the primary enforcer of the new ethics regulations, preventing state attorneys general from acting as an independent check.
Another Democratic negotiator, Ruben Gallego of Arizona, and Republican Thom Tillis of North Carolina said they're working on a compromise ethics proposal to send to the White House but didn't provide details.
Senators in both parties said they see the negotiations in the coming week as key to whether a bill reaches Trump's desk this year. But after the chilly initial reception to the latest White House offer, Senate Majority Leader John Thune said he didn't think the Clarity Act would pass the chamber before the month-long August recess.
"We'll see where the votes are," Thune said.
Alsobrooks, Gallego and other crypto-friendly Democrats are demanding changes to other pieces of the massive bill, including consumer protection and illicit finance measures.
The bill has other issues, including pushback from banks intent on tightening restrictions on stablecoin rewards. Tillis and several other Republicans said they are considering backing changes to reflect banks' concerns that their deposits could shift to stablecoin accounts, crimping their profits and customers' access to credit.