New Draft of Clarity Act Advances with Temporary Ethics Rules

The latest draft of the Digital Asset Market Clarity Act is making its way through the U.S. Senate. This draft includes a previously contentious section that temporarily bans the president and senior government officials from holding direct ties to cryptocurrencies, set to expire in 2029. The proposed legislation follows days of negotiations sparked by President Donald Trump's financial disclosures indicating over $1 billion in earnings from crypto interests.

As the Senate aims for a vote, it requires support from at least 10 Democratic senators due to the need for 60 votes to pass most legislation. Despite efforts to accommodate bipartisan concerns, many Democratic lawmakers have expressed reservations, particularly regarding the ethics provision intended to curb conflicts of interest.

Majority Leader John Thune has indicated a push for swift floor action, aiming to finalize the bill before the summer recess. This latest draft reflects contributions from two Senate committees focused on banking and agriculture, with new language intended to enhance protections for digital assets users and investors.

A notable aspect for the decentralized finance (DeFi) sector is the inclusion of the Blockchain Regulatory Certainty Act, which allows developers who do not control user assets to avoid being treated as 0money transmitters2, thus sidestepping burdensome compliance requirements.

Nonetheless, the bill remains a point of contention within the Democratic caucus, split between those opposing the bill and others negotiating with Republicans. Extremes of opinion notably include Senator Elizabeth Warren's consistent opposition and those in favor who argue that the ethics provisions will bolster policing of illicit finance while providing consumer protections.

Cynthia Lummis, a Wyoming Republican and chair of the Senate Banking Committee's digital assets subcommittee, has voiced her support for the legislation, expressing urgency in enacting measures that assist law enforcement in combating financial crimes.

The upcoming legislative calendar is tight, as the Senate prepares for a summer break. With only a limited window remaining, proponents of the Clarity Act recognize that early August may be the last opportunity for the bill to advance in this session.