Seven Democratic senators voted against the newest version of the CLARITY Act, stating it doesn’t adequately address ethics, protect consumers, or prevent illegal financial activity. Republicans, however, maintain that the bill includes the most robust federal ethics rules ever suggested for digital assets.
Key Takeaways
- Seven Senate Democrats said the latest CLARITY Act draft needs stronger ethics and consumer protections.
- The revised bill would ban federal officials from issuing or sponsoring digital assets for compensation.
- Republicans defended the proposal, while White House adviser Patrick Witt challenged Democrats’ criticisms.
Democrats Say Draft Still Falls Short
A bipartisan agreement on crypto market structure remained out of reach July 22 after seven Democratic senators objected to the latest version of the Digital Asset Market Clarity Act.
Senators Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock – all Democrats – stated that the current plan needs better safeguards. They explained that the proposal, as it stands, doesn’t offer enough protection.
The current version of the CLARITY Act, proposed by Republicans, needs improvement. Important parts dealing with ethical conduct for politicians, protecting consumers, preventing illegal financial activity, avoiding conflicts of interest, and maintaining fair markets all require strengthening.
We’ve spent the last year trying to work constructively with Republicans, and we’ll keep at it until we reach an agreement.
Senator Lummis Unveils Revised Framework
On July 22, Senator Cynthia Lummis (R-WY) and Senate Republicans released updated legislative text for the Digital Asset Market Clarity Act after the Senate Banking and Agriculture committees merged their respective portions of the proposal.
The proposal would establish a federal regulatory framework for digital assets and clarify oversight between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The Senate Banking Committee approved the bill in May by a bipartisan 15-9 vote.
Ethics Provision Becomes Flashpoint
The updated bill would prevent the president, vice president, members of Congress, federal judges, and other high-ranking government officials – as well as their spouses – from creating or promoting digital currencies for profit.
Those who break the rules may have to give back any money they made and pay additional fines. Digital asset companies that intentionally offer banned tokens could be fined as much as $250,000 for each day they do so.
A CLARITY Act ethics summary released by the Senate Banking Subcommittee on Digital Assets defended the provision, stating:
This legislation establishes a single set of ethical rules for all government officials, even the President, and ensures these rules are followed through strong oversight, meaningful consequences for violations, and clear direction for the Department of Justice to take action.
This isn’t just discussion – the President has officially enacted ethics rules into law by signing them personally. This demonstrates that progress in the digital asset space and ethical government can coexist, as shown by the Digital Asset Market Clarity Act.
The proposal states that government officials who already own cryptocurrencies or similar digital assets would need to either sell those holdings or put them into a trustworthy account where they have no control. They would also be required to report any sales of these assets worth more than $1,000.
Patrick Witt Pushes Back on Democratic Criticism
White House crypto adviser Patrick Witt said Democratic criticism appears to center on two issues: the lack of enforcement by state attorneys general and the absence of penalties for President Donald Trump’s previous crypto activity.
Witt explained that letting only federal authorities handle enforcement aligns with current ethics rules. He also pointed out that punishing people for things they did in the past could violate the Constitution. Specifically, he cited a clause preventing Congress from creating laws that retroactively make legal actions illegal.
Negotiators are expected to continue discussions on ethics, consumer protection, and illicit finance as they work toward a final version of the legislation.
2026-07-23 03:28