Key Senate Democrats are balking at the latest version of a cryptocurrency regulation bill over a White House-approved ethics provision that they argue falls short, complicating the bill’s chances of passing in the narrow window before lawmakers leave town next month.
Sen. Cynthia Lummis (R-Wyo.), who leads the Senate Banking digital assets subcommittee, unveiled an updated version of the Clarity Act on Wednesday.
The 616-page text brought together the two halves of the bill from the Senate Banking Committee and Senate Agriculture Committee for the first time. But most notable was the bill’s new ethics provision, which was recently agreed to by the White House.
The provision bars public officials and employees, as well as their spouses, from issuing or sponsoring a digital asset. It also prohibits platforms from listing such assets for trading and puts the attorney general in charge of enforcing the restrictions.
Even before the new text was released, Democrats were already raising concerns about the provision, particularly its enforcement mechanism.
“The provision that says only the DOJ [Department of Justice] would be allowed to have the enforcement responsibility, I think is just wild and unserious and stone crazy right now, given what we have seen from them,” Sen. Angela Alsobrooks (D-Md.) said at a Semafor event on Wednesday.
She and six other crypto-friendly Democrats pointed to this ethics provision, as well as a handful of other outstanding issues, in opposing the latest version of the bill later Wednesday.
“The Republican-proposed text of the CLARITY Act as it currently stands fall short,” Alsobrooks and Sens. Cory Booker (D-N.J.), Catherine Cortez Masto (D-Nev.), Ruben Gallego (D-Ariz.), John Hickenlooper (D-Colo.), Warner (D-Va.), and Warnock (D-Ga.) said in a statement.
“Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened,” they continued. “We have been working in good faith with our Republican colleagues for the past year and will continue doing so to get this over the finish line.”
The senators are part of a contingent of a dozen Democrats that have been central to negotiating the Clarity Act and the GENIUS Act, a stablecoin measure that was signed into law last year. Stablecoins are digital tokens tied to stable assets like the U.S. dollar.
The Clarity Act aims to create a regulatory framework for a much broader swath of the crypto industry, dividing oversight between two main regulators.
After months of negotiations in the Senate, the bill is at a critical inflection point. Experts have warned that the current working period is likely the last stretch to pass the legislation before the midterm elections.
But Senate Majority Leader John Thune (R-S.D.) on Thursday threw cold water on the prospect of wrapping up the legislation before lawmakers leave for their monthlong August recess.
He told reporters he didn’t think senators would be able to get the crypto bill and a college sports bill done in the next two weeks but suggested they could get the Clarity Act moving.
“I would like to at least get Clarity started,” Thune said, according to Politico. “We’ll see where the votes are.”
The measure needs at least seven Democratic votes to pass the upper chamber. An ethics provision has been a key demand for Democrats throughout negotiations in the face of concerns about Trump and family’s involvement in the industry.
Trump’s financial disclosures, which were released in late June, show he made more than $1 billion in crypto-related income in 2025.
Sen. Elizabeth Warren (Mass.), a longtime crypto critic and the top Democrat on the Senate Banking Committee, argued Wednesday that the Clarity Act should be “dead on arrival,” suggesting it “does nothing to prevent him [Trump] from vacuuming up” more profits.
“Even if it did, the President can, and will, simply ignore the law because he handpicked his personal lawyer to lead the Department of Justice that is charged with enforcement and everyone else – including state attorneys general – are explicitly prohibited from bringing any enforcement actions,” she said in a statement.
“The bill goes even further to protect the President’s crypto profits by barring the next Department of Justice from ever holding Trump accountable,” Warren continued.
Trump and his family’s current crypto ventures largely appear to fall outside of the limitations of the provision.
Digital assets issued or sponsored before a public official takes office would not run afoul of the rules as long as they are placed in a blind trust or divested. The provision also does not impact any family members other than spouses.
The section would sunset on Jan. 20, 2029, the final day of Trump’s second term, and would bar the DOJ from prosecuting violations after that date, including for conduct that occurred during the period the provision was in effect.
Gallego, Sen. Thom Tillis (R-N.C.) and other Republicans are working on a counteroffer to the current ethics provision, a source familiar with the discussions confirmed to The Hill.
Patrick Witt, executive director of the president’s council of advisors for digital assets, hit back at Democrats on Wednesday over their opposition to the provision.
In response to the concerns about DOJ enforcement, he argued in a post on X that Democrats are “basically saying that ALL current federal ethics laws are meaningless because none of them are enforceable by state AGs.”
Witt also dismissed pushback over the lack of penalties for Trump’s prior crypto activity, suggesting that “there is literally nothing that can be done to appease you because what you are advocating for is blatantly unconstitutional.”
“We’re also dealing of course with the president’s willingness to subject himself and Melania Trump to the most restrictive ethics language that a president has ever subjected himself to,” she told Fox Business. “But of course there’s no pleasing Democrats at this point.”