A group of Senate Democrats has rejected the latest draft of the CLARITY Act, the sweeping crypto regulatory bill, arguing it still lacks sufficient protections on ethics, consumer protection, illicit finance, conflicts of interest, and market integrity. The move, announced in a joint statement from seven Democratic senators, sent prediction market odds of passage this year down to around 31% — a sharp drop from above 70% after the Senate Banking Committee advanced an earlier version in May 2025.
What the latest draft included
The updated draft, released July 22, includes an ethics package that bars the president, vice president, members of Congress, federal judges, and certain other officials from issuing or sponsoring digital assets for compensation while in office. That restriction expires January 20, 2029. The bill also requires covered officials to divest crypto holdings or place them in blind trusts, and gives the Department of Justice civil enforcement authority — including the ability to sue exchanges that list banned tokens.
Other provisions carried over from earlier negotiations: the Blockchain Regulatory Certainty Act language protecting non-custodial software developers and blockchain infrastructure providers, and the stablecoin rewards compromise. New law enforcement measures include funding for blockchain investigations, training programs, a cyber center targeting nation-state threats, and procedures allowing compliant stablecoin issuers to freeze or reissue tokens when legally required.
Why Democrats said no
Senator Angela Alsobrooks called the proposal to place enforcement solely with the DOJ “wild and unserious and stone-cold crazy,” arguing that state attorneys general should also have enforcement powers. Securities lawyer Amanda Fischer criticized the draft for not forcing immediate divestment and for leaving enforcement to Trump’s appointee Todd Blanche.
Senators Alsobrooks, Booker, Cortez Masto, Gallego, Hickenlooper, Warner, and Warnock issued a joint statement saying the Republican-proposed text “falls short” and that they have worked in good faith for the past year. The bill needs 60 votes to pass the Senate, and Democrats’ objections add another hurdle to achieving bipartisan support.
The path forward
Former CFTC Chairman Chris Giancarlo believes there is a greater than 50% chance the CLARITY Act ultimately fails, but argues that the SEC and CFTC have already established regulatory frameworks that would continue supporting innovation even without the bill. The House passed its own version 294-134 in July 2025, and the Senate Banking Committee advanced the chamber’s draft in May 2025 with two Democrats crossing over. But with seven Democrats now publicly opposed, the bill’s path to 60 votes looks increasingly narrow.
The next concrete step: Senate leadership must decide whether to revise the draft further or bring the current version to a floor vote — a vote it likely doesn’t have the votes to win.
