Key Takeaways
- Seven Senate Democrats said the latest CLARITY Act draft needs stronger ethics and consumer protections.
- The revised bill would ban federal officials from issuing or sponsoring digital assets for compensation.
- Republicans defended the proposal, while White House adviser Patrick Witt challenged Democrats’ criticisms.
Democrats Say Draft Still Falls Short
A bipartisan agreement on crypto market structure remained out of reach July 22 after seven Democratic senators objected to the latest version of the Digital Asset Market Clarity Act.
Senators Catherine Cortez Masto (D-NV), Angela Alsobrooks (D-MD), Cory Booker (D-NJ), Ruben Gallego (D-AZ), John Hickenlooper (D-CO), Mark Warner (D-VA) and Raphael Warnock (D-GA) said the proposal requires stronger protections. The senators said:
“The Republican-proposed text of the CLARITY Act as it currently stands falls short. Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened.”
“We have been working in good faith with our Republican colleagues for the past year and will continue doing so to get this over the finish line,” they added.
Senator Lummis Unveils Revised Framework
On July 22, Senator Cynthia Lummis (R-WY) and Senate Republicans released updated legislative text for the Digital Asset Market Clarity Act after the Senate Banking and Agriculture committees merged their respective portions of the proposal.
The proposal would establish a federal regulatory framework for digital assets and clarify oversight between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The Senate Banking Committee approved the bill in May by a bipartisan 15-9 vote.
Ethics Provision Becomes Flashpoint
The revised bill would prohibit the president, vice president, members of Congress, federal judges and other federal officials, along with their spouses, from issuing or sponsoring digital assets for compensation.
Violators could be required to surrender profits and pay civil penalties, while digital asset intermediaries that knowingly list prohibited tokens could face fines of up to $250,000 per violation per day.
A CLARITY Act ethics summary released by the Senate Banking Subcommittee on Digital Assets defended the provision, stating:
“This bill applies one ethics standard to everyone, including the President of the United States, and backs it up with real enforcement, real penalties, and a Department of Justice mandate to act.”
“This is not talk. It is a president writing enforceable ethics rules into law and signing them himself. Digital asset innovation and clean government can go hand in hand, and the Digital Asset Market Clarity Act proves it,” the summary noted.
According to the summary, officials with pre-existing interests in previously issued digital assets would be required to divest those holdings or place them in a qualified blind trust. It would also require disclosure of digital assets sold for compensation and valued above $1,000.
Patrick Witt Pushes Back on Democratic Criticism
White House crypto adviser Patrick Witt said 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.
Witt argued that allowing only federal enforcement is consistent with existing ethics laws. He also said imposing penalties for past conduct would conflict with Article I, Section 9 of the U.S. Constitution, which prohibits Congress from passing ex post facto laws that retroactively criminalize conduct that was legal when it occurred.
Negotiators are expected to continue discussions on ethics, consumer protection, and illicit finance as they work toward a final version of the legislation.
No Comment! Be the first one.