The U.S. Senate is advancing significant cryptocurrency legislation that would explicitly prohibit federal officials, including the President, from issuing or sponsoring digital assets, with a vote potentially occurring as early as next week.
Republican senators updated and released the text of the Clarity Act on Wednesday, marking the first time federal officials' crypto asset activities would be brought under regulatory constraints.
Former President Donald Trump has expressed approval for the ethics provisions within the bill, a development drawing significant attention. Recent disclosures indicate Trump earned approximately $1.2 billion in crypto-related revenue during his first year back in the White House.
The bill would be enforced by the Department of Justice, with violators facing fines of up to $250,000 per day. Senate Majority Leader John Thune stated that he expects the Senate to vote on the bill within the coming weeks.
Whether the bill can secure sufficient bipartisan support remains its biggest uncertainty. Passing the bill in the Senate requires 60 votes, and Democrats have voiced strong objections to the enforcement mechanism, arguing that granting regulatory authority to the Justice Department is unreliable. Simultaneously, the banking industry has also expressed reservations about provisions in the bill related to crypto rewards.
This legislation holds landmark significance for the cryptocurrency industry. Reports on Tuesday that the White House and Republican senators had reached an agreement on the ethics standards in the Clarity Act helped push Coinbase shares up by about 10% that day, with other crypto assets like Circle and Bitcoin also strengthening.
However, following today's release of the specific text, the market gains did not hold. As of publication, Coinbase was down 5% and Circle was down 7% in Wednesday's trading session. Among cryptocurrencies, BTC fell 1% and ETH declined 0.1% on Wednesday.
Ethics Provisions Emerge as Key Point of Contention
The arrangement for ethics oversight is the central sticking point in the current negotiations.
According to the bill text obtained by CNBC, the latest draft adds a clause explicitly banning the President and federal officials from issuing or sponsoring any digital asset. This marks the first time in U.S. legislative history that a clear red line has been drawn regarding presidential involvement in cryptocurrency activities.
However, Democrats maintain fundamental objections to the enforcement mechanism.
Maryland Democratic Senator Angela Alsobrooks has stated clearly that she is unwilling to support a plan that places crypto ethics oversight under a Justice Department led by Trump. She noted this week that Trump's personal gains of over ten billion dollars in the crypto space last year make it politically more difficult for Democrats to back the bill.
Thune has taken a firm stance on this. "Once the text is public, we need to figure out what changes can get us to 60 votes," he said. "Regardless, we need to move to a vote."
Regarding timing, Thune indicated the Senate would vote on the bill "in the coming weeks," with the window falling just before Congress's August recess. This leaves limited time for negotiations, and whether the bill can bridge the divide over the enforcement of its ethics provisions will be crucial to its advancement.
Crypto Industry Support Contrasts with Banking Sector Concerns
Within the industry, major cryptocurrency firms like Coinbase and Ripple have been actively advocating for a unified national regulatory framework, and the Clarity Act represents one of their long-sought lobbying goals.
The banking industry's stance is markedly different. Several banking groups, including the American Bankers Association and the Financial Services Forum, issued a joint statement on the day the updated text was released, arguing the bill "still threatens the local lending that drives the American economy."
Banks particularly oppose crypto platforms offering reward mechanisms akin to bank deposit interest, viewing it as unfair competition.
Bipartisan Will for Cooperation Persists
Despite clear disagreements, some key lawmakers this week expressed cautious optimism about reaching a deal.
New York Democratic Senator Kirsten Gillibrand—who also chairs the Democratic Senatorial Campaign Committee—and Wyoming Republican Senator Cynthia Lummis both indicated there is still room to find common ground in the negotiations.
Gillibrand's involvement is particularly noteworthy. As a steward of Democratic election funds, her stance reflects, to some degree, the party's practical consideration of the crypto industry's political influence, rather than a purely policy-based position.
The bill is listed as a priority legislative item for the Trump administration, aiming to establish the first comprehensive regulatory framework for the digital asset market. This is of significant importance for a cryptocurrency industry long operating in a regulatory gray area.
Crypto Industry Political Spending Pressures Democrats
The legislative outlook is closely intertwined with the crypto industry's political fundraising efforts.
According to Federal Election Commission filings, the pro-crypto political action committee Fairshake and its two affiliated super PACs have raised $164 million for the current midterm election cycle and have already spent $66.6 million to influence election outcomes.
Analysts suggest that if Democrats choose to block this industry-priority legislation, they could face large-scale political retaliation from these funds. For Democratic lawmakers in an election cycle, this pressure objectively creates an additional incentive to support the bill.
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