The counterproposal for ethics clauses in a bipartisan crypto bill would require President Donald Trump and other federal officials to divest their holdings in digital asset companies if the value of the stake exceeds $1 million and represents 10% or more of the company's value. According to sources familiar with the matter, the restriction applies to firms whose primary revenue comes from digital asset issuance or sponsorship.
The ethics counterproposal was submitted to the White House last week by North Carolina Republican Senator Thom Tillis and Arizona Democratic Senator Ruben Gallego. Democrats had previously rejected a White House-backed Republican ethics proposal and demanded the inclusion of such provisions in the legislation to address concerns about the Trump family's crypto ventures. It remains unclear exactly how the clause would apply to Trump, but it could require him to divest his stake in World Liberty Financial, a crypto company co-founded with his sons.
The bill, named the Clarity Act, still has its ethics provisions under ongoing discussion. Tillis told reporters on Thursday afternoon that his office has had "discussions" with the White House, "but we haven't exchanged written documents yet."
Key areas of debate
The counterproposal also allows state attorneys general to sue the Justice Department for failing to enforce the ethics requirements and permits them to take legal action against crypto exchanges that list assets violating the ethics rules. The authority of state attorneys general is a major sticking point in the ethics negotiations. Democrats argue they do not trust the Justice Department under Trump to enforce any ethics rules, while Republicans oppose giving state attorneys general such a role, fearing it could be used to target political opponents across party lines.
Gallego stated in a release: "This sensible bipartisan ethics agreement ends Trump's crypto profiteering by requiring him to divest his holdings, stopping him from making another dollar from 'rug pulls.'" He added, "If these rules had become law before Trump took office, they could have prevented the $1.4 billion in corrupt gains he has made during this term."
Tillis said in a statement that he has made it clear he "will vote to proceed with the Clarity Act, but will not support final passage without a bipartisan ethics agreement." He noted, "We have crafted a fair proposal that directly addresses the legitimate concerns of both parties, including enforcement and preventing state attorneys general from abusing litigation for partisan purposes."
The White House did not immediately respond to a request for comment on Thursday evening. Republicans supporting the crypto bill hope to hold a preliminary procedural vote before the Senate's August recess, but GOP leadership currently does not expect the bill to advance before the break. The ethics dispute is the biggest hurdle in bipartisan negotiations, with other policy issues still unresolved. The legislation requires bipartisan support to move forward.
The ethics counterproposal submitted last week also covers federal officials with holdings below $1 million. Any official with holdings exceeding $15,000 must place the assets in a blind trust or divest them. The ethics requirements would take effect one year after the bill becomes law, and officials would have six months after that effective date to comply with the divestment rules.
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