Senate Democrats rejected the ethics provision in the latest Clarity Act draft this week, throwing the bill's path into doubt. Majority Leader John Thune said he doesn't think the bill can pass before the August recess, though White House crypto adviser Patrick Witt pushed back, saying he's 'slightly more optimistic.' The fight centers on who enforces the rules — and whether Democrats can trust the Trump Justice Department to do it.
The ethics fight
The disputed language came from an agreement between the White House and Republican Senators Cynthia Lummis and Bernie Moreno. It would bar federal officials from issuing digital assets and would sunset in 2029. Lummis defended it, saying President Trump is supporting the most robust ethics rules ever imposed on the office of the presidency.
Democrats aren't buying it. Senator Ruben Gallego (D-AZ) called the GOP text 'whatever piece of s--t they sent back to us' and said it wasn't a serious effort. He's working on a counteroffer with Senator Thom Tillis (R-NC) and other unnamed Republicans. The core issue: Democrats won't accept an ethics provision with DOJ as sole enforcer, citing distrust of the Trump administration. Earlier talks broke down over the role of state attorneys general in enforcement.
The ethics fight traces directly to President Trump's crypto ventures. A July disclosure tied those ventures to more than $1 billion in income over the past year. A group of seven Democrats led by Angela Alsobrooks said the text 'falls short' on consumer protection, illicit finance, and conflicts of interest.
The clock is ticking
The Clarity Act has 14 days before the August deadline. Industry and congressional negotiators had marked August 7 as the date the bill needed to clear the Senate for a real shot at passage this year. Thune tempered expectations on the calendar, saying he doesn't think they'll be able to get the bill done before recess, but would like to at least get it started. A start before recess would leave the bill for a narrow window in September, with midterm campaigning and other priorities crowding the floor.
Thune's staff pointed to a Russia sanctions bill as the next floor item. Tillis called the White House-approved language 'good' but said it falls short of what some Democrats want, and one more talk with the White House lies ahead. The White House has pressed Democrats to accept the draft.
Beyond ethics
Ethics isn't the only sticking point. Some Republicans have flagged the treatment of stablecoin yield. Wall Street is split — Goldman Sachs backs the bill, JPMorgan opposes it. Galaxy Research cut its passage odds to 50-50.
The House passed its version in July 2025. The Senate version has moved through months of bipartisan talks, but the ethics provision has become a dealbreaker. Gallego and Tillis are working on a counteroffer, but with the clock running, it's unclear whether they can bridge the gap before August 7.
