Republican senators have included rules limiting cryptocurrency investments for government officials in a bill called the CLARITY Act. However, opposition from Democrats has lowered the chances of the bill becoming law by 2026, decreasing its likelihood from its highest point in July.
Summary
- Senate Republicans added crypto ethics rules, but Democrats still oppose the CLARITY Act’s enforcement plan.
- Polymarket passage odds fell 15 points as bipartisan negotiations remained stalled.
- Coinbase shares dropped 4% while investors assessed the bill’s uncertain Senate path.
Senator Angela Alsobrooks, a Democrat, doesn’t believe relying just on the Department of Justice to enforce ethics rules is a good idea and has called the plan “unserious.” She stated she won’t vote for the CLARITY Act unless there are other ways to ensure those rules are followed.
Alsobrooks stated she plans to oppose the bill if it remains unchanged when it reaches the Senate. Her vote is significant because she was one of just two Democrats who supported the bill’s progress through the Senate Banking Committee in May.
As an analyst following these negotiations, I’ve observed that President Trump agreed to the ethics stipulations earlier this week. This came about because Democratic lawmakers insisted on restrictions regarding cryptocurrency dealings by elected officials as a prerequisite for continuing talks. While it resolved one sticking point, we’re still no closer to a broader bipartisan deal – enforcement remains the key obstacle.
Eleanor Terrett from Crypto in America and Brendan Pedersen from Punchbowl News report that the White House shared the proposed wording with Republican senators on July 20th. Democrats hadn’t seen the language before news of the agreement with Trump was released.
Democratic resistance cuts the bill’s passage odds
The current proposal would apply to the president, vice president, members of Congress, and federal judges, as well as their spouses. It would prevent these officials from buying, selling, or promoting digital assets like cryptocurrencies while in office.
Government officials subject to the new rules would be required to either sell any cryptocurrency they own, put it into a blind trust, or do both. The rule is currently set to end at noon on January 20th, 2029, coinciding with the scheduled end of Donald Trump’s presidential term.
One part of the new rule would let companies still use a public figure’s name, photo, or other recognizable traits if they had a deal in place *before* that person became subject to these rules. It also doesn’t seem like the restrictions will apply consistently to all members of a public figure’s family.
Following reports that Donald Trump made up to $1.4 billion from cryptocurrency investments last year, Democrats insisted on including ethics guidelines in the proposed legislation. Senators Jon Ossoff and Kirsten Gillibrand made it clear to their colleagues in July that the bill wouldn’t move forward without rules to prevent conflicts of interest for elected officials.
When Trump first voiced his support, traders began to anticipate a higher likelihood that the CLARITY Act would be passed. On July 21st, Polymarket, a prediction market, showed the odds of the bill becoming law in 2026 increasing to around 43%, up from 32% the previous Friday.
Initial positive results disappeared when Democrats questioned how the agreement would be put into practice. The value of the contract dropped to 39%, and then around 35%, as reported by Polymarket, effectively undoing the hopeful feeling created by Trump’s acknowledgment of defeat.
Coinbase stock dropped around 4% to close at almost $169 on July 22nd, likely due to growing concerns about new regulations. The day before, it had closed at $175.85, and during the next trading session, the price fluctuated between approximately $166 and $175.
The recent drop in price happened while investors were considering new laws that could impact how cryptocurrency exchanges, companies creating tokens, and stablecoin businesses function in the U.S. The proposed bill in the Senate still needs 60 votes to pass, and then it must be combined with a version already approved by the House and signed by President Trump before it becomes law.
With 53 Republicans in the Senate, they need support from at least seven Democrats to pass any bill, assuming all Republicans are on board. Because Alsobrooks plans to vote against it, those backing the proposal don’t currently have enough votes to get it approved.
Enforcement disputes keep crypto regulation unsettled
In addition to the section on ethics, Republicans included wording to address worries from prosecutors and law enforcement. These groups had expressed concern that the Blockchain Regulatory Certainty Act might hinder their efforts to investigate and prosecute illegal activity involving cryptocurrency services that aren’t controlled by a central authority.
In May, Democrats on the Senate Banking Committee expressed similar worries about national security. They cautioned that the proposed bill shouldn’t have loopholes that could be used by those trying to avoid sanctions, criminal organizations, or foreign enemies.
Republican members of the committee point out that the bill already includes rules to prevent money laundering and requires digital-asset companies to share information. While the revised version gives law enforcement more power to fight crime involving cryptocurrency, it hasn’t settled a separate debate about how to enforce ethical standards.
The Commodity Futures Trading Commission has also been receiving questions about where to find helpful regulatory information. At a House Agriculture subcommittee hearing on July 21st, Carl Kennedy, a former CFTC lawyer, pointed out the agency might not have enough staff to properly monitor the rapidly expanding prediction market and prepare for potential new responsibilities with digital assets under the CLARITY Act.
In 2025, the total value of trades on prediction markets registered with the CFTC surpassed $25 billion, according to Kennedy’s statement. One leading platform saw a significant jump in the number of events people could bet on, rising from around 1,600 daily listings in April 2025 to almost 162,000 in April 2026.
As an analyst, I’m still seeing uncertainty around this bill, even with the revisions Republicans made to address ethics and law enforcement issues. While they’ve changed the bill, it’s clear we haven’t fully resolved how to hold officials accountable. Looking at market indicators, like decreasing Polymarket odds and the performance of Coinbase shares, it’s evident traders aren’t interpreting Trump’s concession as a done deal – they don’t see this as a fully finalized, bipartisan agreement yet.
2026-07-22 22:26