- Seven Senate Democrats oppose revised CLARITY Act over ethics concerns.
- The pushback threatens the crypto market structure bill’s chances ahead of the August recess.
- Ripple executives call on Congress to advance the CLARITY Act despite opposition.
The Senate’s Digital Asset Market CLARITY Act is facing new resistance after a group of pro-crypto Democrats said the latest draft still lacks key protections. With Congress set to begin its August recess on August 7, the bill’s path to passage has become increasingly uncertain.
The latest pushback comes as former Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo said there is a greater than 50% chance the legislation does not pass.
Seven Democratic Senators Oppose Current Draft
Seven Democratic senators, Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock, issued a joint statement saying the Republican-backed draft “falls short.”
The lawmakers said the bill needs stronger provisions covering ethics for elected officials, consumer protection, illicit finance, conflicts of interest, and market integrity. They added that they would continue negotiating with Republicans but argued that more work is needed before the legislation can move forward.
Their opposition is significant because Alsobrooks and Gallego were the only Democrats who previously voted to advance the CLARITY Act out of the Senate Banking Committee. Losing their support makes reaching the 60 votes needed in the Senate considerably more difficult.
Ethics Rules Remain the Biggest Obstacle
Republicans released a revised version of the bill this week after merging proposals from the Senate Banking and Agriculture Committees.
The updated draft 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.
Officials with existing crypto interests would be required to divest those holdings or place them into qualified blind trusts, while violations could trigger profit forfeiture, civil penalties, and fines for intermediaries that knowingly list prohibited tokens.
The White House-backed proposal also gives enforcement authority to the Department of Justice.
Democrats remain unconvinced. They argue the ethics provisions are too weak, noting that the restrictions expire in 2029 and exclude enforcement by state attorneys general.
White House crypto adviser Patrick Witt defended the proposal, saying federal enforcement is consistent with existing ethics laws. He also argued that Congress cannot impose penalties for conduct that was legal before the law is enacted because doing so would violate the US Constitution’s prohibition on ex post facto laws.
Senate Clock Is Running Down
Senate Majority Leader John Thune still plans to bring the bill forward, but lawmakers have only a short window before Congress leaves for its August recess. If the legislation fails to clear the Senate before then, negotiations could stretch into 2027, when election-year politics may make bipartisan cooperation more difficult.
Market expectations have also weakened. On Polymarket, the odds of the CLARITY Act becoming law in 2026 have fallen to 38%, down from more than 75% in February.
Some Believe Crypto Will Move Forward Anyway
Former CFTC Chairman Giancarlo said the crypto industry can continue developing under regulatory frameworks already being established by the Securities and Exchange Commission (SEC) and the CFTC, even if Congress does not pass the CLARITY Act.
According to Giancarlo, regulatory work already underway at both agencies could provide enough certainty to support innovation while making it harder for a future administration to reverse recent progress.
Meanwhile, Ripple Chief Legal Officer Stuart Alderoty described the CLARITY Act as a consumer protection bill that would strengthen anti-money laundering rules, improve law enforcement tools, and create clearer standards for the industry. He added that lawmakers should not let the perfect become the enemy of the good, urging Congress to pass the legislation.
Ripple CEO Brad Garlinghouse seconded that view, saying lawmakers should not allow the pursuit of a perfect bill to prevent meaningful crypto legislation from becoming law.
Related: Will the CLARITY Act Protect Your Crypto When a Platform Collapses?
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