Senator Cynthia Lummis argued this week that the Digital Asset Market Clarity Act would shut down financial loopholes exploited by North Korea's Lazarus Group, which has stolen at least $3.4 billion in crypto since 2007. The bill, which cleared the House in 2025 and was advanced by the Senate Banking Committee in May, now faces a tight path to passage before the August recess. A merged draft released July 22 added ethics rules and illicit-finance language.
The Lazarus connection
Lazarus Group is the outfit behind the $1.5 billion Bybit heist in February 2025 — the largest crypto theft on record — and the $625 million Ronin Bridge exploit in 2022. Treasury says the group has used crypto to fund North Korea's weapons programs. Lummis said the Clarity Act closes the financial gaps that let Lazarus move stolen funds through exchanges and mixers. The bill's Section 201 applies Bank Secrecy Act and anti-money-laundering rules to crypto firms. Section 303 adds sanctions authority aimed at Iran, and Section 305 lets exchanges freeze funds tied to suspicious activity if they cooperate with law enforcement.
What the bill does
The Digital Asset Market Clarity Act (H.R. 3633) gives Treasury new sanctions tools and a legal shield for exchanges that freeze suspicious funds. That shield is key: exchanges have been reluctant to freeze assets without clear legal cover, worried about lawsuits from users. The bill also requires crypto firms to follow traditional AML rules, something many have resisted. Lummis framed it as a national security measure, not just a market regulation. “It closes gaps,” she said, pointing to Lazarus's ability to launder through multiple jurisdictions.
The political math
Republicans hold 53 seats and need roughly seven Democratic votes to hit the 60-vote threshold. Senate Majority Leader John Thune said no final vote is expected before the August 2026 recess, but floor debate may begin. Democratic holdouts want firmer ethics language on officials' crypto holdings before they'll support the bill. Senator Elizabeth Warren has called the bill a sanctions loophole, while Lummis argues it does the opposite. Polymarket traders price 2026 passage at 33% to 37%, down from above 80% in February. The drop reflects the tight timeline and lingering disagreements.
Thune's office hasn't set a date for floor debate, but it could start in the next few weeks. If the bill doesn't pass before the August recess, it'll have to wait until September — and the odds on Polymarket suggest traders aren't betting on a quick resolution. The unresolved question is whether the ethics language can be tightened enough to win over the holdout Democrats without losing Republican support.
