Senate negotiators on the CLARITY Act are stuck on Democratic demands for ethics language limiting how much senior officials, including the president and vice president, can profit from crypto ventures. Republicans added restrictions to the July 22 draft, but Democrats call them too narrow and weakly enforced. Polymarket now prices the bill's 2026 passage at 27%.
Senate negotiators on the CLARITY Act have run into a Democratic condition: ethics language limiting how much senior officials, including the president and vice president, can profit from digital asset ventures. Those demands could decide whether the market structure bill the industry has wanted for years gains the votes it needs to become law.
Democrats call the July 22 language too narrow
Republicans wrote ethics restrictions into the July 22 CLARITY draft, but Senate Democrats say it remains too narrow and weakly enforced. According to CryptoSlate, a group of Democratic negotiators said the ethics and conflict-of-interest provisions "must be strengthened", while Senator Elizabeth Warren named the investment exception, affiliated-company structures, and DOJ-only enforcement as loopholes.
The condition traces back to a warning crypto figures made before the 2024 election, when they argued that tying the industry too closely to a political figure could turn market structure legislation into a partisan fight. Trump's family-backed venture World Liberty Financial launched before voters went to the polls, with reports flagging conflict-of-interest problems at the time.
Gallego and Tillis prepare a counteroffer
Democrat Ruben Gallego and Republican Thom Tillis are finalizing a bipartisan ethics counteroffer they aim to send to the White House in the next couple of days. Tillis signalled that attorneys general enforcing ethics provisions, not just the DOJ, is among the key proposals.
But the Senate has put the bill on hold to vote on a Russia sanctions bill and federal nominations, leaving a window too narrow to pass CLARITY before the August 8 recess.
Passage odds hit a new low
Polymarket traders marked "Clarity Act signed into law in 2026" down to 27% on July 29, the lowest level yet. Galaxy had already cut its 2026 passage estimate from 75% in May to 60% in June, then to near 50-50 as Senate scheduling tightened.
Ethics is one fight among several. Disputes over stablecoin rewards, state enforcement authority, SEC fundraising exemptions, anti-money-laundering rules, and investor protections all remain open. The House passed the Digital Asset Market CLARITY Act 294 to 134 in July 2025, and the Senate Banking Committee advanced it in May 2026 — further than most market structure bills have travelled.
Meanwhile SEC Chair Paul Atkins said the regulator is ready to write crypto rules even if Congress does not pass the CLARITY Act.
Sources: CryptoSlate, CoinGape
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