Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
With only a few workdays left before the U.S. Congress enters its summer recess (scheduled to begin on August 7th), time is running out for the "Digital Asset Market Structure Act" (hereinafter referred to as the Clarity Act) to pass through the Senate.
Last week, the White House agreed to include an "ethics provision" in the Clarity Act aimed at restricting the President, Vice President, members of Congress, and other federal officials from profiting from digital assets during their terms. This move was widely interpreted by the market as an indication that Trump and the Republicans had expressed a willingness to compromise and reach a consensus with Democratic senators on this remaining major point of contention.
However, as details of the Clarity Act amendments were revealed, the market discovered that the situation is far more complex than imagined.
Alex Thorn, Head of Research at Galaxy, posted over the weekend, stating that the Clarity Act is now on the final "one-yard line." Like in American football, this last yard might be the toughest yard on the field; in politics, it is a game of fierce, inch-by-inch contention...... Considering the limited time remaining and the strong opposition from the Democratic senators involved in negotiations to the current wording of the ethics provision, the probability of the bill being enacted by 2026 has been lowered to 30%.
The Biggest Disagreement Lies in the Details of the Ethics Provision
Alex Thorn summarized in his post that there are still varying degrees of disagreement on multiple aspects of the Clarity Act, including developer protections, DeFi regulatory boundaries, stablecoin yield restrictions, CFTC registration mechanisms, and newly added enforcement provisions.
However, the current broad consensus in the market is that the greatest obstacle preventing further progress of the bill remains the ethics provision, which was previously interpreted as an area where Trump and the Republicans were willing to concede.
According to the latest consolidated Senate text, the Clarity Act spans 616 pages. The newly added content related to the ethics provision is primarily used to restrict the President, Vice President, members of Congress, and other senior federal officials from engaging in digital asset-related activities. This includes prohibiting the issuance or promotion of digital assets by such officials and their spouses during their terms, restricting the listing of related assets on regulated platforms, requiring disclosure of interests, and introducing a blind trust mechanism. At the same time, the provision stipulates that enforcement authority lies with the Department of Justice (DOJ) and that it will automatically expire on January 20, 2029, after the end of Trump's current term.
The problem is that Democrats believe the current version of the ethics provision still has significant shortcomings.
- First, Democrats believe that granting enforcement authority solely to the Department of Justice lacks sufficient independence. Since the DOJ is part of the executive branch, and the current Acting Attorney General, Todd Blanche, is also Trump's former personal lawyer, there are doubts about the effectiveness of internal oversight when the restrictions involve the President or senior administrative officials. Therefore, Democrats demand that enforcement authority be given to various Inspectors General.
- Secondly, the provision for automatic expiration in 2029 has also drawn strong criticism and opposition from Democrats. This timing coincides exactly with the end of Trump's current presidential term, meaning that after Trump leaves office, there will be no legal basis for successors to investigate Trump's past actions. Democrats argue that if the goal of the Clarity Act is to establish a long-term digital asset regulatory framework, then ethical norms should also become a permanent institution, not one that terminates with the end of Trump's term.
- Furthermore, Democrats are also concerned that the current scope of restrictions is still limited. The current version primarily targets direct actions like issuing or promoting digital assets but does not explicitly restrict involvement in crypto profits through affiliated businesses, family members, or other indirect means, especially considering that several of Trump's sons are deeply involved in the cryptocurrency industry. The adequacy of the current version's coverage remains questionable.
Democratic Senator Elizabeth Warren, a consistent strong critic of the bill, issued a formal statement last week criticizing the "DOJ-only enforcement" mechanism in the ethics provisions, calling the bill something that "should be dead on arrival."
More impactful for the vote count is that the seven Democrats who have been negotiating with Republicans (Sens. Mark Warner, Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, Raphael Warnock) also issued a joint statement saying the current text "falls short."
As for the Republican side, they appear, for now, to show no signs of further concessions in response to the Democrats' strong resistance. Patrick Witt, Executive Director of the White House Digital Asset Advisory Committee, stated firmly that the President has made historic concessions, yet Democrats remain unsatisfied — "you can't hit a home run, hit two home runs."
How Much Time Window Remains?
Early this morning, Senate Majority Leader John Thune stated that he would temporarily set aside the Clarity Act to prioritize advancing government official nomination confirmations and the Russian sanctions bill. Additionally, the Senate will be occupied on Tuesday and Wednesday this week due to the funeral of the late Senator Lindsey Graham.
This means that the already limited time available for the Clarity Act to advance before the summer recess has been further compressed. Current market expectations are that the Clarity Act may not enter the voting process until next week at the earliest, the final few days before the Senate recess.
Former Senate staffer Anne Kelley also posted on X today, stating that according to Senate rules, once the cloture process is initiated on a major, controversial bill, that bill becomes the Senate's primary agenda — until the completion of amendment consideration, a second cloture vote, and up to 30 hours of formal debate, it is difficult for the Senate to simultaneously advance another major, contentious bill.
This means that the Clarity Act not only has to face the question of whether it can resolve its own differences in time but also must compete for the already limited Senate voting time with other contentious bills like the Russian sanctions bill, the budget bill, and the SAVE Act.
This is why, although the market once hoped the Clarity Act could pass before the recess, more and more Washington observers are lowering their expectations.
For the cryptocurrency industry, this prolonged legislative battle has now entered its final stage. The regulatory framework is just "one step away" from implementation, but whether that step will be taken in the coming days or will be deferred to an uncertain future will soon be revealed.
