Summary
- The fresh draft of the Clarity Act prohibits the president, government officials, and their spouses from engaging in cryptocurrency activities while in office, but this measure will expire on January 20, 2029, with enforcement assigned to the Justice Department—provisions that may face Democratic pushback.
- The ethical concerns revolve around Trump's involvement with meme coins and World Liberty Financial, particularly after revelations that he made over $1.2 billion from crypto last year.
- This bill retains the Blockchain Regulatory Certainty Act, which assures that non-custodial developers are not classified as "money transmitters."
The latest iteration of the Clarity Act is now being reviewed in the U.S. Senate, featuring a contentious ethics clause that many Democrats have advocated for: a ban on the president and his family from participating in cryptocurrency-related business while in office. However, this prohibition is set to expire, meaning it would not restrict President Donald Trump's sons.
As detailed in the 616-page draft, the ethics clause would prevent public officials and their spouses from issuing or backing digital assets during their term. Nevertheless, officials would still be permitted to invest in cryptocurrencies, and the restrictions would not apply to the children of these officials.
The Justice Department would be responsible for enforcing this section, which contains a sunset provision stating it will have "no force and effect on and after noon on January 20, 2029"—the conclusion of the current presidential term.
This ethics clause is regarded as a significant challenge that must be overcome for the comprehensive market-structure bill to pass. If enacted, it would officially legalize most cryptocurrency operations in the United States.
“Today's draft represents a substantial advancement toward the Senate vote on the Clarity Act we have been advocating for,” stated Digital Chamber CEO Cody Carbone. “We are eager to analyze the latest version and will offer our members' insights on potential improvements as it progresses.”
The ongoing debate regarding significant restrictions on conflicts of interest centers on President Donald Trump's meme coin projects and his family's business, World Liberty Financial. Recent financial disclosures indicated that Trump generated over $1.2 billion from crypto ventures last year, which Democrats have pointed to as indicative of conflicts of interest. Senator Elizabeth Warren has insisted that the bill should prevent the president, vice president, senior officials, members of Congress, and their families from profiting in this sector.
The temporary nature of the ban, combined with the choice to place enforcement solely under the DOJ's authority, is likely to provoke objections from Democrats. Additionally, because the language does not include President Trump's children—Don Jr. and Eric Trump, who are involved with World Liberty Financial—the measure may not achieve the comprehensive impact that Democrats were aiming for. The bill requires 60 votes to progress in the Senate, which necessitates backing from at least 10 Democrats, many of whom have already expressed reluctance.
Besides the ethics discussion, the latest draft continues to include the Blockchain Regulatory Certainty Act, which establishes a safe harbor for non-custodial software developers by clarifying that they are not classified as "money transmitters" and thus are not subject to the compliance responsibilities that accompany that designation. This provision is considered crucial by many in the crypto industry, as it offers legal clarity and encourages domestic development. The clause follows prosecutions during the Trump administration that targeted crypto developers for creating privacy tools.
There has also been opposition to this provision. Law enforcement agencies and a coalition of 82 Catholic leaders have cautioned that the protections for developers could undermine safeguards against human trafficking, money laundering, and child exploitation.
Another contentious issue, the regulation of stablecoin yields that has provoked criticism from the banking sector, remains unchanged in this draft. The bill maintains limits on idle yields, preventing stablecoin issuers and platforms like Coinbase from offering rewards solely based on stablecoin holdings.
Majority Leader John Thune plans to bring the bill to the Senate floor in the coming days. With the August recess approaching, the first week of August is considered the last viable opportunity for the bill to advance before focus shifts to the upcoming November midterms.