Seven Senate Democrats rejected the latest CLARITY Act draft on July 22, keeping a bipartisan deal on crypto market structure out of reach. They want tougher ethics, consumer-protection and illicit-finance provisions; Republicans counter that the bill already carries the strongest federal ethics rules ever proposed for digital assets.
A bipartisan agreement on crypto market structure slipped further away on July 22, when seven Democratic senators objected to the newest version of the Digital Asset Market Clarity Act. Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner and Raphael Warnock said the proposal requires stronger protections.
The group said the bill's provisions on ethics, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened, calling the current text short of the mark: "The Republican-proposed text of the CLARITY Act as it currently stands falls short." They added that they had worked with Republican colleagues for the past year and would keep doing so.
Lummis unveils a revised framework
Ethics has become the main flashpoint in the fight over the digital assets bill. On July 22, Senator Cynthia Lummis and Senate Republicans released updated text after the Senate Banking and Agriculture committees merged their sections of the proposal. The measure would create a federal regulatory framework and clarify how oversight is split between the SEC and the CFTC.
The Senate Banking Committee had already approved the bill in May on a bipartisan 15-9 vote.
Ethics provision draws the battle lines
The revised bill would bar the president, vice president, members of Congress, federal judges and other officials, along with their spouses, from issuing or sponsoring digital assets for compensation. Violators could be required to surrender profits and pay civil penalties. Intermediaries that knowingly list prohibited tokens could face fines of up to $250,000 per violation per day.
A CLARITY Act ethics summary from the Senate Banking Subcommittee on Digital Assets defended the rules, saying they apply one standard to everyone and carry a Department of Justice mandate to act. Officials with pre-existing holdings would have to divest or place them in a qualified blind trust. The summary would also require disclosure of digital assets sold for compensation and valued above $1,000.
White House pushes back
White House crypto adviser Patrick Witt said the Democratic criticism appears to center on two issues: the lack of enforcement by state attorneys general and the absence of penalties for President Donald Trump's previous crypto activity. He argued that allowing only federal enforcement is consistent with existing ethics laws. Witt also said penalizing past conduct would conflict with the Constitution's ban on ex post facto laws.
Negotiators are expected to keep talking over ethics, consumer protection and illicit finance as they work toward a final version.
Source: Bitcoin News
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