On July 22, Cynthia Lummis entered the next chapter of the CLARITY Act story carrying 616 pages.
Senator Lummis of Wyoming has been working for years to persuade Washington that clear federal rules are needed for cryptocurrency. She believes these rules should be established before companies and investment move overseas. When she recently unveiled a combined bill from the Senate Banking and Agriculture Committees, she stated the next few weeks represent a critical – and potentially final – opportunity to pass effective legislation on this issue.
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Typically, a document of this size – 616 pages – taking seven months to negotiate would signal its completion.
In this one, it merely gave everyone enough paper to explain why they still hated the deal.
The proposal included everything Democrats had been asking for over the past few months: rules for how the market would operate, limits on rewards for stablecoins, safeguards for developers, measures to prevent illegal financial activity, tools for law enforcement, and an ethics division. This wasn’t just a rough outline or a verbal agreement anymore – it was a complete document.
The CLARITY Act finally existed in full.
Seven Senate Democrats – including Angela Alsobrooks and Ruben Gallego, who previously supported the initial version in committee – stated that the revised Republican proposal still didn’t adequately address concerns regarding ethics, consumer safety, illegal financial activity, potential conflicts of interest, and overall market fairness.
Washington has not yet found the deal.
Trump Enters Through the Ethics Division
Donald Trump isn’t directly involved in this process. He doesn’t lead the Banking Committee, author the proposed legislation, or have a vote on whether it passes the Senate. This story focuses on the actions of senators, not him.
Yet by July, Trump had become the person around whom the final negotiations revolved.
The president pushed for the CLARITY Act, with his team participating in negotiations. However, his personal investments in cryptocurrency unexpectedly made ethical considerations the central issue – and ultimately, the key requirement for getting the bill approved.
According to Senate Banking Democrats, Donald Trump made over $1.4 billion from cryptocurrency investments in 2025. They are using this information to insist that any new legislation regarding financial market structure must include rules preventing the president, vice president, top government officials, members of Congress, and their families from potential conflicts of interest related to crypto.
This wasn’t a problem Republicans could fix with just another reporting rule and then forget about it.
Lawmakers from the Democratic party faced a tricky situation: they were expected to create regulations for an industry where the President held significant investments. At the same time, President Trump was being asked to approve laws that could limit the very business dealings causing this potential conflict of interest.
Republican senators met with President Trump at the White House to explain how the CLARITY Act could be successful.
The meeting didn’t result in any immediate announcements, but a revised document appeared within days, now including a dedicated ethics department.
Everyone expected that moment to be Trump acknowledging defeat, a win for the Democrats, and a signal for the industry to move forward. But it just sparked another dispute.
The Ethics Rule Bans a Transaction, Not the Relationship
The new law clarifies who it applies to: it includes public officials, government employees, and their spouses. While in office, these individuals are prohibited from creating or promoting digital assets for profit.
The language goes beyond personally minting a token.
Issuing a digital asset means creating it, putting it into circulation, launching it, or managing its initial release. Sponsoring involves supporting its creation through organization, funding, or promotion, and may also include allowing the use of official branding like names, images, or titles during its launch.
That would address the most obvious form of political crypto profiteering.
The President can’t use the White House to promote and sell a new digital currency. A Senator isn’t allowed to personally profit while using their position to help sell an asset. And, any exchange that deliberately lists a token created in violation of these rules could also be penalized.
Then the bill begins explaining everything the rule does not do.
This rule lets officials keep their cryptocurrency investments as long as they follow current rules about disclosing holdings and avoiding conflicts of interest. They’re also free to speak publicly about crypto policy, support the general use of digital assets, and take official actions related to them – unless they’re being paid by a specific cryptocurrency to do so.
This difference could hold up in court because Congress is regulating a commercial exchange of money, not someone’s right to speak politically or simply own investments.
But it also reveals how narrow the compromise is.
This law doesn’t completely separate government officials from the cryptocurrency world. Instead, it focuses on a single issue: when an official is paid to create or promote a particular digital currency.
Government officials can continue to hold cryptocurrency even as they develop policies around it. They’re allowed to speak publicly about the crypto industry, encourage its growth, and make regulatory choices that could impact their own investments.
The deal bans the transaction.
It does not necessarily remove the financial relationship.
Alsobrooks Was Never a Guaranteed Vote
Angela Alsobrooks, a former prosecutor, has often been cited – through her votes in committee – as evidence that there’s strong support from both Democrats and Republicans for the CLARITY Act.
That is not what she said.
In May, when Alsobrooks voted to advance the bill out of the Banking Committee, she explained it was simply a step towards further discussion. She made it clear this didn’t mean she would definitely support the bill when it came up for a full Senate vote, and she highlighted that she still had concerns about ethics and how the law would be enforced.
Ruben Gallego also supported the bill, resulting in a 15-9 committee vote that met Republican requirements. He and another Democrat became key figures for supporters to highlight when people doubted the bill could gain support from both parties.
On July 22, both names appeared on the statement rejecting the current draft.
Senators Alsobrooks and Gallego were joined by Cory Booker, Catherine Cortez Masto, John Hickenlooper, Mark Warner, and Raphael Warnock. While they didn’t give up on the bill, they stated that several parts needed improvement before it could be passed.
That is the difference between committee momentum and floor support.
For weeks, Republicans urged President Trump to agree to ethical guidelines. When a plan with White House support finally emerged, they acted as if that resolved the entire issue.
It settled the Republican side of the negotiation. The Democrats had not agreed.
Those who initially pushed for an ethics clause were presented with a compromise drafted mainly by the White House and Republicans, and then expected to be pleased that Trump agreed to it. They weren’t satisfied and insisted on reopening negotiations for a new agreement.
Trump’s Justice Department Gets the Only Key
The enforcement section explains why.
This law requires the attorney general to take legal action against anyone who intentionally breaks the rules. Using the word “shall” makes this a firm requirement, not just an option for the attorney general.
Then the next subsection closes every alternative door.
Neither state attorneys general nor individuals can take legal action to enforce this rule. Only the U.S. Attorney General has the power to do so.
Democrats pushed for the rule, arguing that Donald Trump’s involvement with cryptocurrency creates a problematic conflict of interest between his public duties and personal finances. Republicans countered with a proposal that would be overseen by an entity within Trump’s own administration.
The group facing ethical questions would also be in charge of the investigation into those same concerns, creating a conflict of interest.
Just because something happened doesn’t mean the Justice Department wouldn’t uphold the law. As an investor, I understand the Attorney General would still *have* to follow the rules, and they’d only step in if someone deliberately and knowingly broke them. It’s about intentional violations, not just mistakes.
Look, just having laws on the books doesn’t actually *do* anything about crypto crime. Laws don’t investigate scams or bring cases to court all by themselves – you need people and resources to enforce them. As an investor, it worries me that we have rules but not enough follow-through.
Even with this proposal, the Justice Department would still decide if an action broke the law and deserved prosecution. If they chose not to pursue a case, it would leave state authorities, individuals, and others who might try to enforce the law with no legal recourse.
The compromise gives the ethics rule teeth. Then it hands the only toothbrush to the White House.
Warren Introduces the Escape Clauses
Elizabeth Warren takes a unique approach; she’s the one carefully examining the fine print and potential problems even as others are focused on initial successes.
While I didn’t anticipate Senator Warren personally supporting any industry-driven market structure legislation, my team’s research did pinpoint the key areas of concern. This analysis should prove valuable as other, more open-to-negotiation Democrats address these issues.
Members of the Banking Committee who oppose the current proposal say it doesn’t prevent Donald Trump from profiting from his cryptocurrency investments, permits officials to own digital assets while in office, and gives the Justice Department sole responsibility for enforcing the rules. Senator Warren has declared the revised bill effectively defeated.
Her criticism will not automatically kill the legislation.
What it does is map the next Democratic demands.
Companies might face wider rules affecting their current operations and all sources of income. Regulators could be given more power to enforce these rules, perhaps through state attorneys general or an independent oversight body. They may also question how political branding is handled after a company sells off parts of its business, and argue that legal responsibility should continue even after certain deadlines pass.
From what I understand, the White House feels like Trump’s already made significant concessions by agreeing to rules that cover presidents and government employees. But as a Democrat, I think the current deal doesn’t go far enough – it stops future conflicts of interest but doesn’t really deal with the ones that are already happening with his businesses. It feels like a half-measure to me as an investor.
Both sides can say they support an ethics rule.
They are describing different rules.
The Penalty Looks Tough Until the Money Gets Large
The penalty section follows the same pattern.
If an official deliberately breaks the rules, they’d be required to give up any money earned through that wrongdoing. This is the harshest penalty, as it eliminates any financial gain from their actions.
If the bill passes, a fine will be added – either 10% of the money received, or $500,000, whichever amount is lower.
The final four words matter.
Okay, so here’s how I understand the penalties as a crypto investor: If someone in power made a cool million from a shady deal, they could be hit with an extra $100,000 fine. But if that deal brought in way more – like $100 million – even though 10% of that is $10 million, the maximum penalty they’d actually pay is still just $500,000. Basically, there’s a limit to how much they can be penalized, no matter how big the profit.
Even if the Justice Department successfully sued and recovered ill-gotten gains, any extra fine would seem smaller in relation to a very large deal. So while recovering those gains would still be significant, the impact of an additional penalty decreases as the size of the transaction increases.
Half a million dollars could ruin an ordinary person.
When dealing with a politically-driven cryptocurrency project bringing in vast sums of money – potentially hundreds of millions – even that massive amount might be downplayed in official announcements.
The Rule Expires When Trump Leaves
The sunset clause is even more precise.
The main ethical rule will no longer be in effect at noon on January 20, 2029, which is when the current president’s time in office finishes.
Once the law expires, no one will face any penalties, lose property, or be held responsible under it, even for things they did before it expired.
This is not a conventional sunset that merely stops the rule from governing future behaviour.
It attempts to switch off remaining liability as well.
Republicans might say this restriction is a response to a current issue, and that it should be reviewed by future lawmakers instead of being made permanent. They may also feel a temporary agreement is the fastest way to overcome legal and political concerns so they can pass the rest of the bill.
But consider the offer from the Democratic side.
Lawmakers are being asked to back a new ethics rule prompted by Donald Trump’s involvement with cryptocurrency. This rule would be enforced solely by Trump’s Justice Department and is set to expire as soon as he leaves office.
The rule does not look like a permanent standard governing political crypto interests.
It looks like a temporary permit designed to carry one bill through one presidency.
The Deposit War Is Still Underneath Everything
The ethics battle is now so loud that it is easy to forget how this story began.
It began with deposits.
As I pointed out earlier this year, the initial disagreement wasn’t actually about which agency would oversee more of the cryptocurrency industry.
It was about who controlled idle American money.
From my analysis, it became clear that traditional banks were hesitant about crypto platforms—specifically those offering stablecoin rewards—because they feared losing customer deposits. Meanwhile, Coinbase seemed reluctant to fully embrace regulation, likely because doing so would mean sacrificing the competitive advantages they’d built up against those same banks.
The dispute turned the bill into a standoff between Donald Trump, Coinbase, and bank lobbyists.
The revised bill continues to ban interest earned on stablecoin holdings, but it keeps some agreements in place regarding rewards for using them. The disagreement that led to a public clash between Jamie Dimon and Brian Armstrong remains unresolved.
Dimon was the person who made the original conflict honest.
He understood the issues with the proposed regulations for stablecoins weren’t just about technical details. He stated openly that banks were prepared to challenge them, signaling these rules posed a significant threat beyond simple wording and compliance.
They threatened the float.
Everyone expected the ethics agreement to resolve the last remaining political issue, now that the economic concerns were already addressed.
Instead, it joined the list of obstacles.
The CLARITY Act no longer has one dealbreaker.
It has diversified.
The Fugazi Has Evolved
The April CLARITY Act fugazi was easy to understand.
Donald Trump supported the proposed law, prompting Coinbase to re-engage in talks. This renewed activity led regulators and industry organizations to feel optimistic about progress.
Congress could not produce a markup date.
The question was simple: where was the bill?
After a lengthy process, the report reached 309 pages and was finalized by the committee. In June, disagreements between Dimon and Armstrong became public.
Now the merged bill is public, which makes the new fugazi more sophisticated.
While there are new ethical guidelines, government officials are still allowed to own cryptocurrency. Companies that previously used an official’s name can keep doing so even if the official sells their investments or puts them into a blind trust.
The plan includes a way to enforce rules, but only one organization – controlled by the government – is allowed to actually use it.
The agreement requires giving up any ill-gotten gains, and while there’s also a fine, it won’t be more than the amount of those gains.
It contains a sunset, but that sunset also attempts to eliminate liability for previous conduct.
Republicans achieved significant progress. President Trump agreed to include an ethics clause, even though it was politically difficult. And Senate staffers developed detailed plans for new regulations.
None of that is imaginary.
The fugazi is the insistence that movement should be treated as agreement before the votes exist.
Trump Has a Bill, Not a Deal
The CLARITY Act can still pass.
Seven Democratic lawmakers who disagree with the current proposal stated they’re still willing to talk and try to reach a deal. Republicans suggested ways to strengthen the agreement, including adding provisions to ensure it’s followed, extending legal responsibility beyond its expiration date, and setting stricter rules for businesses already operating.
Former President Trump might agree to these changes. Then, the Senate could schedule debate time, and some Democrats might decide a flawed nationwide plan for cryptocurrency is preferable to relying on unpredictable regulatory decisions.
That outcome remains possible.
But after seven months, possibility should no longer be marketed as inevitability.
January was the deposit war.
February brought Trump and World Liberty Financial into the ethics conflict.
April became the hostage negotiation and then the fugazi.
May delivered the final committee hand, while June brought open war between Dimon and Armstrong.
July was supposed to settle all the disputes and get the touchdown before August 8 .
As a researcher following this legislation, it’s been quite a week! While former President Trump was being updated by senators, Republicans were working on an ethics agreement related to the bill. Senator Lummis also published a massive 616-page document outlining details. Interestingly, two Democrats who had previously supported moving the bill forward quickly teamed up with five other senators to call for even stricter wording.
2026-07-24 19:08