Senators Thom Tillis and Ruben Gallego have sent the White House a revised CLARITY Act ethics proposal that would let state authorities, not just the Department of Justice, enforce a ban on federal officials issuing digital tokens. The counterproposal responds to Democratic concerns about oversight as Senate negotiators push to finalize the crypto market structure bill before the August recess. Treasury Secretary Scott Bessent has urged a vote before senators leave Washington.
Republican Sen. Thom Tillis and Democratic Sen. Ruben Gallego have submitted a counterproposal to the White House that would let state authorities help enforce the CLARITY Act's ethics rules, according to Punchbowl News. The plan changes how Washington would police federal officials' crypto activity as Senate negotiators continue seeking enough Democratic support to advance the broader market-structure bill.
Instead of giving the U.S. Attorney General sole enforcement authority, the revised text would let state authorities enforce a ban on federal officials issuing or sponsoring digital tokens. The change targets an objection Senate Democrats raised: leaving enforcement solely to the Department of Justice, which sits inside the executive branch, would not provide enough independent oversight.
Ethics language has been the sticking point
The White House said on July 22 that it had accepted what it called the most extensive federal ethics restrictions ever proposed, after negotiating with Republican Sens. Cynthia Lummis and Bernie Moreno. But the administration didn't disclose the final wording or how the provisions would be enforced at the time. Barron's had previously reported that some lawmakers wanted state attorneys general to share enforcement authority, a position that closely matches the latest proposal.
Gallego says protections still need to be stronger
Gallego has repeatedly said the bill needs stronger ethics safeguards before it can win Democratic support. He said protections covering ethics, consumer protection, illicit finance, conflicts of interest, and market integrity "must be strengthened," adding he would keep working with Republicans to get the bill across the finish line.
Many Senate Democrats have also warned they won't back the CLARITY Act if they believe it lets President Donald Trump keep influence over an industry his administration would regulate, pointing to his memecoin project and his family's ties to World Liberty Financial. Republicans hold an effective 52-47 majority in the Senate because Sen. Mitch McConnell remains absent for medical reasons, but they still need Democratic votes to reach the 60-vote threshold most legislation requires.
White House faces a shrinking calendar
Treasury Secretary Scott Bessent called on senators this week to hold a vote on the CLARITY Act before the August recess, arguing lawmakers should publicly state where they stand. Bessent has also defended the Blockchain Regulatory Certainty Act, aimed at non-custodial software developers, a position the National Fraternal Order of Police and the Major Cities Chiefs Association have since backed after initially raising concerns.
The House passed its version of the CLARITY Act in July 2025 with bipartisan support, but the Senate must still finalize the ethics package and secure enough Democratic votes before the bill can move forward.
Source: crypto.news
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