Welcome to the latest update regarding the Clarity Act. Is its passage imminent? The verdict from Congress remains uncertain, but time is of the essence as we are already in July.

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Countdown to Clarity

The Clarity Act did not become law by July 4, despite White House adviser Patrick Witt's earlier optimism about its passage by that date. Moreover, the urgency to get it passed is escalating.

Importance of Timely Passage

If the Clarity Act fails to pass Congress before the midterm elections, its future becomes uncertain. Should the balance of power shift in the House or Senate, the bill's original form may face significant changes as Democrats may seek to implement their own priorities. Consequently, we are entering a critical period if a signing in 2026 remains feasible.

Current Perspectives

While some observers have not declared the bill dead, there is cautious optimism among three individuals involved in the legislative process regarding its chances this year. They cite several reasons for this outlook.

Although Congress is not in session frequently this summer, much of the necessary work is occurring behind the scenes. For instance, staffers are reportedly meeting to address discrepancies between the Senate Agriculture Committee and Senate Banking Committee's versions of the bill. The Senate could complete the public debate and voting process in a matter of days.

One insider noted that invoking cloture and securing 60 votes for passage should not take long. The House is also expected to move quickly on the bill, though some uncertainties remain.

Recent developments, including a Supreme Court ruling that impacts independent agencies and President Donald Trump's financial disclosures, are unlikely to derail negotiations significantly.

Last week, President Trump disclosed his financials for 2025, revealing an income of $2 billion, with approximately $1.4 billion originating from the crypto sector, including earnings from his memecoin venture and token sales. In comparison, his 2024 financial disclosures reported "tens of millions of dollars" in total income.

Additionally, Trump reported holdings of over $100 million in various cryptocurrencies, along with minor stakes in companies like Corewave.

In response to Trump's disclosures, Senator Elizabeth Warren, a prominent Democrat on the Banking Committee, emphasized the need for an ethics provision in the Clarity Act, stating, "The crypto legislation heading to the Senate floor must prevent the president, vice president, senior administration officials, members of Congress, and their families from profiting off the crypto industry. If it does not, it will only turbocharge Donald Trump’s brazen crypto corruption."

Senator Ruben Gallego echoed similar sentiments, asserting his commitment to addressing Trump's alleged corrupt dealings in crypto. Although he supported the bill in committee, he stressed the necessity for enforceable ethical standards before he could fully endorse it on the Senate floor.

Despite Trump's financial disclosure providing Democrats with a clear figure to advocate for ethical regulations, it does not fundamentally alter the ongoing discussions surrounding such provisions. Democrats, including Gallego and Senator Angela Alsobrooks, have consistently expressed the need for restrictions on senior government officials profiting from crypto before endorsing the bill's passage. Negotiators still need to reach a consensus, and Trump must ultimately approve it, irrespective of the disclosure.

Resolving ethical concerns will likely be one of the final issues addressed as the various drafts of the bill are reconciled.

Recent Developments

Another significant event last week was the Supreme Court's ruling allowing the president to dismiss independent agency commissioners at will. Part of the Democrats' requests during the Clarity negotiations includes a bipartisan selection of commissioners for the Securities and Exchange Commission and Commodity Futures Trading Commission, which remains a point of contention.

There are broader challenges that could hinder the Clarity Act's progress. Observers noted that the U.S. House of Representatives has been struggling with procedural matters, as highlighted in reports from Punchbowl News and Politico. Politico's Calen Razor pointed out that the pre-midterm agenda for House and Senate leaders appears increasingly unachievable, while Punchbowl's Jake Sherman described the House as being in a state of paralysis.

The House is contemplating a potential third reconciliation budget bill, but it faces its own set of obstacles. Even if both the Senate and House pass the Clarity Act, questions remain about whether Trump will sign it, especially since he has not yet approved the bipartisan housing bill passed last month, linking his approval to the passage of a voting ID bill.

The Senate is mindful of the House's situation, and this atmosphere of dysfunction may be dampening their urgency in the negotiations.

The next critical date to monitor is August 7, 2026, marking the last day of the Senate term before the summer recess and the commencement of the campaign season. Although Congress will reconvene for a few weeks in September, they will have other pressing matters, such as the National Defense Authorization Act.

This Week's Agenda

  • The House and Senate are both on recess this week. However, this does not imply that work has ceased.

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