The Clarity Act was supposed to give crypto its long-awaited federal rulebook. The latest draft instead shows the Senate’s hardest problem is political trust, especially whether President Donald Trump and other officials can keep crypto ties while Washington writes the rules.
A working version of the Digital Asset Market Clarity Act is now circulating as senators try to push the bill toward a floor vote before summer recess, according to CoinDesk. The draft includes an ethics provision aimed at crypto conflicts for the president and senior officials, but that rule would sunset in 2029 and regulators would have one year after enactment to implement it.
That makes the new Clarity Act draft both progress and a warning. The market-structure language is moving. The ethics fight is not settled.
The Clarity Act now has a rulebook problem and a credibility problem
Crypto firms expected the final fight over the Clarity Act to center on market structure: which tokens fall under which regulator, how exchanges register, and how non-custodial developers are treated.
The reality revealed by this draft is messier. The Senate is also trying to answer whether public officials should be restricted from benefiting from digital assets while they influence the legal framework around them.
That tension has already shaped the bill’s path. CoinDesk reported that the conflict-of-interest section has been a major final point of contention, with the draft leaving the Department of Justice in charge of policing related ethics complaints. Senator Angela Alsobrooks, one of the Democrats who voted for the bill in committee, blasted that idea before the bill’s release:
“This DOJ enforcing an ethics provision? That's an unserious offer, and I wouldn't support the bill if that's the language. But we'll keep working from that floor to reach an agreement that holds us all accountable.”
The Senate math explains why that matters. Most legislation needs 60 yes votes, and CoinDesk reported the final bill is expected to need at least 10 Democrats. If the ethics language cannot hold those votes, the broader crypto framework may stall again. That risk tracks with our earlier coverage of how the ethics fight threatens the Crypto Clarity Act before recess.
What the Clarity Act would actually change for crypto market structure
At its core, the Clarity Act is a market-structure bill for digital assets. The supplied draft details point to a framework covering token treatment, exchanges, federal agency roles, public blockchain use by financial institutions, and pathways for tokenized securities and futures markets onchain.
Miller Whitehouse-Levine, CEO of the Solana Policy Institute, said the bill would provide a “clear regulatory treatment for tokens and token fundraising, establish regulation for exchanges, give financial institutions the green light to use public blockchains, direct the federal agencies to create a regulatory pathway for tokenized securities and futures markets onchain and, most critically, establish robust consumer and developer protections.”
The draft also keeps the Blockchain Regulatory Certainty Act, or BRCA, intact. That matters for DeFi developers because the provision would mean developers that do not control users’ assets would not be treated as “money transmitters,” avoiding the compliance burdens that classification would bring.
Here is the shift the draft is trying to make:
| Assumption before this draft | Reality in the circulating draft |
|---|---|
| Ethics language might be excluded or delayed | It is included, but would sunset in 2029 |
| DeFi developer protections might be traded away | BRCA remains intact |
| Democrats might be satisfied by adding an ethics section | Some Democrats are already objecting to DOJ-led enforcement |
| The Senate still had time to negotiate slowly | CoinDesk reported the Senate had only days remaining before summer recess |
The latest text also includes language on federal preemption, provisional registration procedures, and commodity pool operators, according to CoinDesk. Those details are still being studied by policy experts, and the exact legal effect depends on final wording.
The temporary ethics rule is the bill’s pressure valve
The ethics provision is the political centerpiece because it reaches directly into Trump’s crypto exposure.
CoinDesk reported that Democrats have focused on Trump’s personal financial disclosures, which revealed he had earned more than $1 billion from crypto interests last year. The draft would impose limits on Trump’s crypto involvement, though CoinDesk also reported it is not clear when those limits would be effective for him or what he would do about his crypto business ties, including an ownership stake in World Liberty Financial.
Additional reporting from The Crypto Times says the updated text would bar the president, vice president, members of Congress, federal judges, other covered officials, and their spouses from issuing or sponsoring digital assets for compensation while in office, with a sunset date of January 20, 2029. It also says covered officials would have to sell crypto holdings and crypto-company investments, place them in a blind trust they do not control, or both.
The temporary structure signals compromise. Republicans can say they accepted an ethics package. Democrats can say the provision is too weak if enforcement sits only with DOJ or if the rule expires.
That gap is why the bill is still not locked. A temporary ethics rule may help the Clarity Act move. It may also become the reason Democrats demand another rewrite.
How a crypto exchange would read this draft in practice
For a U.S. crypto exchange, the draft is less about headlines and more about legal sorting.
Take a simple case grounded in the circulated ethics language: an exchange is considering whether to list a token tied to a covered official. Under The Crypto Times’ summary, DOJ would have civil enforcement authority over ethics violations, including the ability to sue exchanges that knowingly list prohibited tokens. That means the exchange would need to know whether the token is covered, whether the sponsor is a covered official, and whether compensation or ownership triggers a restriction.
The compliance chain would start with questions like these:
- Token status: Does the asset fall under the bill’s token treatment framework?
- Platform obligations: Does the exchange need provisional registration or another path under the draft?
- DeFi carveout: Is the activity protected by BRCA because no user assets are controlled?
- Ethics exposure: Is a covered official or spouse involved in issuing, sponsoring, selling, or benefiting from the asset?
- Disclosure trigger: The Crypto Times reported disclosure would be required for crypto sales exceeding $1,000 by covered officials.
For stronger platforms, clearer federal language could reduce some uncertainty around listings and registration. For weaker projects, the same clarity cuts the other way. Fewer gray zones mean fewer places to hide.
That is the real trade. The Clarity Act offers legitimacy, but legitimacy comes with narrower escape routes.
Democrats, banks, and crypto lobbyists are fighting over different weak spots
The latest Clarity Act draft is not drawing one clean opposition line. Different groups are objecting for different reasons.
Democrats are focused on ethics, consumer protection, illicit finance, conflicts of interest, and market integrity. Forbes reported that Sens. Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock said the Republican-proposed text “falls short” and that key provisions “must be strengthened.”
Crypto advocates see the draft as a step toward passage. Digital Chamber CEO Cody Carbone said:
“Today’s draft is a meaningful step toward the Senate vote on the Clarity Act we’ve been calling for. We’re encouraged, and we’re ready to keep working until the bill reaches the president’s desk.”
Banking groups remain dissatisfied. CoinDesk reported that banking trade associations said the new draft “still puts at risk the local lending that drives economic activity in the U.S.” Forbes also cited the Bank Policy Institute saying the text still fails to address shortcomings around Main Street credit, illicit finance, and national security interests.
That split echoes the dynamics in our report on how Goldman CEO defies banks to back the Clarity Act fight. The bill is not simply crypto versus banks. It is banks versus banks, Democrats versus Democrats, and industry access versus public-sector ethics.
The clauses that will decide whether the Clarity Act survives the next draft
The next Clarity Act draft should be read line by line, not press release by press release.
The highest-value clauses are the ones that determine who gets covered, when obligations start, and who enforces violations. Investors, founders, and compliance teams should focus on:
- Definitions: Which tokens, platforms, developers, and activities fall inside the bill.
- Deadlines: Whether the one-year ethics implementation window changes.
- Sunset language: Whether the ethics rule still expires in 2029.
- Enforcement authority: Whether DOJ remains the lead ethics enforcer or state attorneys general get a role.
- BRCA treatment: Whether non-custodial developer protections survive final negotiations.
- Stablecoin provisions: Whether the current yield language remains unchanged.
- Registration pathways: How provisional registration is written and who qualifies.
The practical implication is straightforward. The circulating draft moves the United States closer to a national crypto rulebook, but the bill’s durability will depend on two unresolved questions: whether Democrats accept the temporary ethics compromise, and whether the final agency-power split gives both industry and regulators enough certainty to live with it.
Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.
Impact Analysis
- The draft shows crypto market-structure legislation is advancing but remains politically fragile.
- A temporary ethics rule ending in 2029 may not satisfy lawmakers worried about conflicts of interest.
- Putting the DOJ in charge of enforcement could become a major obstacle to bipartisan support.
Originally published on XOOMAR. For more news and analysis, visit XOOMAR.
