The ethics provisions of the Clarity Act still leave ample space for the president to profit while the regulatory design grants bureaucrats excessive latitude.
A failed Senate procedural vote on the Digital Asset Market Clarity Act on Tuesday may have spared crypto consumers from a regulatory bill that many viewed as industry-friendly.
The measure—an unprecedented framework aimed at supervising the crypto sector—would have drawn distinct boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for governing the offer and sale of digital commodities.
Rather than letting the SEC police crypto through individual enforcement actions—as it does today—the bill would provide holders of digital assets with a clear path to legal certainty by imposing disclosure obligations, retaining both agencies’ anti-fraud powers, and establishing risk-management, cybersecurity, and compliance standards for decentralized finance.
Yet, the legislation would also vest federal agencies with substantial discretion, authorizing them to craft new rules and exemptions and to coordinate with international regulators if it is “in the public interest or for the protection of investors,” opening the door for career bureaucrats to decide what is best for Americans.
After a year of bipartisan talks, The Wall Street Journal reports the measure failed to clear a procedural hurdle that would have let it come to a full Senate vote, because Democrats were not convinced the ethics provisions were strong enough to bar the president, Donald Trump, from continuing to profit from digital assets.
This assessment aligns with an ABC News report indicating that Trump’s June financial disclosures show crypto earnings topping $1.4 billion. The tally includes more than $591 million from World Liberty Financial (WLF), about $636 million from his CIC Digital meme-coin venture, and over $196 million from the equity sale of a WLF-linked holding company. Last year, the president announced that he would host an “intimate private dinner” for the top 220 holders of his $TRUMP meme coin; in the days following, the coin’s value jumped roughly 50 percent.
The bill would prohibit the president, vice president, members of Congress, senior federal officials, and their spouses from profiting from crypto tokens, promoting tokens, or owning a meaningful stake (defined as $15,000 or more) in a crypto enterprise such as WLF. Anyone currently holding such a stake would have to divest or place it in a blind trust—or face penalties starting at $500,000 and the potential loss of any profits.
These provisions represent progress but remain largely modest and do little to dispel concerns about corruption linked to the president’s crypto dealings.
Even with a blind trust, the president could still benefit from WLF, and any future tokens launched by the company would be grandfathered under the bill. The ethics rules also overlook children and other relatives, a gap that could effectively shield WLF, a firm founded by Trump’s sons and the sons of U.S. peace envoy Steve Witkoff. The bill would assign the Department of Justice (DOJ) to enforce penalties against violators. Given the DOJ’s conduct during the Trump era, questions arise about whether the attorney general would remain impartial.
Under the bill, state attorneys general would have the power to sue the Justice Department for harms to their state or residents. However, they would not be permitted to sue federal officials. State AGs would also be empowered to hold trading platforms accountable if they violate state laws.
Despite the disagreements, the bill remains on the Senate calendar and could reappear. On Tuesday, Sen. Thom Tillis (R–N.C.) said this is “not the end” for the measure. Forbes reports that it is “unlikely Senate Majority Leader John Thune will allocate calendar time without clear commitments from both parties.”
Lawmakers’ back-and-forth has not stopped the drive to regulate the crypto sector.
On Thursday, with congressional leadership missing, the SEC issued an order—as part of its Project Crypto initiative to establish the U.S. as a hub for crypto—permitting certain trading platforms to issue digital tokens that represent shares of publicly traded U.S. stocks. The order provides a five-year Innovation Exemption to platforms enabling tokenized stock trading and further integrates digital assets with traditional markets like Nasdaq and the New York Stock Exchange.
In a post on X, CFTC Chairman Mike Selig described the failed vote as “unfortunate,” adding that the CFTC is “locked in and ready to ship its rules for the new frontier of finance.”
