CLARITY Act Enters Crucial Week Under Trump Ethics Cloud

The CLARITY Act aims to create a regulatory framework for digital assets by defining whether cryptocurrencies are regulated by the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC), among other provisions.

The hearing comes as lawmakers race to pass the bill before Congress begins its recess on 7 Aug after months of delays. Its path narrowed further after a speech by Trump on 16 Jul inflamed tensions with Democrats, whose support is needed to clear the Senate's 60-vote threshold. Meanwhile, negotiations over ethics restrictions tied to Trump's crypto ventures remain unresolved, increasingly weighing on the bill. 

Ethics remain a key hurdle

Braden Perry, a litigator and partner at Kennyhertz Perry LLC, told Sandmark ethics provisions remain the issue most likely to determine whether lawmakers can reach agreement.

Democrats have pushed for stronger conflict-of-interest provisions that would limit how elected officials and their families can financially benefit from the crypto industry while in office. 

"The ethics provision is still the main hurdle, but the two issues are now feeding each other," he said. "Democrats' core objection is that the bill regulates an industry the president personally profits from." 

Trump has been in the crypto spotlight lately after his latest financial disclosure revealed the president's crypto-related ventures generated over $1.4bn in 2025.

On 16 Jul, President Trump also met with Senate Republicans to discuss the CLARITY Act legislation before delivering the speech in which he reiterated claims that US elections were vulnerable to fraud and called on Congress to pass the SAVE Act, which would require voters to provide documentary proof when they register to vote and a photo ID when they go to the polls.

Perry said that speech may have made it harder for some Democrats to support the bill.  "A partisan election-fraud speech the night before a floor push makes that argument easier to sell to colleagues who were on the fence," he added.

"Here's the thing: the seven to nine Democrats the bill needs are not the Warren wing," Perry said, referring to Democratic Senator Elizabeth Warren, who's been a leading critic of Trump's crypto ventures and often of crypto overall. "They are members who want a market structure law and need political cover to vote for one. The speech shrinks that cover. It does not eliminate it."

Broader agreement remains 

Ryan Kirkley, chief executive and co-founder of Global Settlement Network, agreed that negotiations over digital asset legislation have become increasingly politicised over the past year.

However, he noted that while "politics will always influence the pace of negotiations," he believes the more substantive debate remains focused on "governance, transparency and making sure the framework gives the public confidence that appropriate safeguards are in place."

Kirkley added that the ethics provisions are unlikely to derail the legislation because there is broad recognition across Washington that the US "cannot afford to leave such an important part of the financial system operating without clear rules."

Is the passage realistic before recess?

When asked whether lawmakers could still pass the bill before the August recess, Kirkley said there is a chance because of the "genuine sense of urgency" around providing regulatory certainty.

"The longer that uncertainty continues, the harder it becomes for institutions to commit capital and build with confidence in the US market," he added. "Legislative timelines are never straightforward and there will almost certainly be further negotiation before anything reaches the finish line."

Perry similarly said the bill can still pass before Congress's August recess, but only if lawmakers resolve the ethics dispute within days.

"Realistic, yes. Likely, no," Perry said. "[Senate Majority Leader John] Thune has committed to a floor vote and the week of July 20 is the target. But the procedural math is unforgiving," Perry said.

Perry said the Senate has little room for delays because the legislation must clear multiple procedural votes before lawmakers leave for recess.

"If the ethics language gets resolved in the next few days, the bill can move," Perry said. "If it slips past this week, you are looking at a fall calendar dominated by the NDAA [National Defense Authorization Act], appropriations and midterm politics, and the honest answer becomes 2027. The window is measured in days now, not weeks."