President Donald Trump is scheduled to meet with legislators today to discuss the CLARITY Act, the stalled crypto market infrastructure legislation. The legislation was approved by the Senate Banking Committee, but a floor vote on the bill has yet to arrive.
While the CLARITY Act was approved in the US House of Representatives a year ago, the bill has been delayed in the US Senate due to pushback from opposing legislators, mainly Democrats who either do not support digital asset innovation or see the legislation as a way to rein in the Trump family’s participation in crypto markets.
Several Senate Democrats recently described the CLARITY Act as “corrupt.”
During his first week in office, President Trump signed an Executive Order to drive innovation and economic opportunity for the United States that aims to make the country the leader in the digital asset economy by establishing regulatory clarity for crypto. While the goal of the EO may be correct, the reality has been a bit of a legislative odyssey as TradFi sought to undermine various aspects of the legislation, and politics muddied the waters for Senate approval.
Patrick Witt, the White House lead on crypto legislation and the Executive Director of the President’s Council of Advisors for Digital Assets, posted on X yesterday that the “world won’t wait on America forever. We can either lead the way on digital assets by passing the Clarity Act, or watch as someone else sets the rules of global finance for us.”
The US is at a key inflection point after wasting years during the Biden Administration to define the digital asset industry. As the US is home to the world’s most important financial ecosystem, other jurisdictions are closely watching how the US regulates crypto. What emerges from Congress will create a trail for the rest of the world.
Eventually, all securities and other assets will be managed onchain; now is the time to craft the rules.
There have been multiple reports that the updated language of the CLARITY Act would arrive on a certain day or soon, only to be disappointed. It appears that “ethics language” may be the final hurdle. Democrat Senator Chris Murphy took to X to outline his problems with the legislation, stating;
“The CLARITY Act is the bill supported by the crypto industry to increase their reach into our banking system and broader economy. There are many problems with the bill, but most egregious is that is essentially legalizes Donald Trump’s crypto corruption scheme.”
Murphy claimed “it’s a bad bill” that would put a “veneer of legitimacy on the crypto industry.” He predicted it would “jeopardize the stability of our entire economy.”
“…maybe the most important [missing] provision of the bill is the ethics title. The most corrupt thing that Donald Trump is doing is issuing his own cryptocurrency. He is doing this as part of his family business, and estimates are that Trump and his family have made $2 billion off of the sale of this cryptocurrency — often, you know, Trump fans spread out all over the country — connected to the Iranian government, [and] connected to all sorts of people who want access to the president. So there has to be a section of this bill that says the president and his family members cannot issue a cryptocurrency, be it a meme coin or a stablecoin, while the president is in office. But from what we know right now, the CLARITY Act — which, by the way, has Democratic and Republican supporters — does not have an ethics provision that bans the president and his family from issuing cryptocurrency. And by the way, it’s not good enough to just ban the president, because the president is running these crypto businesses through his sons. So the ethics provision has to cover the president and his immediate family members. And so the ethics provision has to cover [purchases] through the purchase of his cryptocurrency. It has to have [an] airtight ethics provision as part of it.”
While concerns regarding enforcement issues seem to be fading as proponents caucus with concerned groups to alleviate these fears, the Democrats see President Trump and his family’s participation in crypto as a clear political opportunity to undermine Republican ambitions. As the midterms are just around the corner, the Democrats can use the poor optics by the President to boost support for their candidates.
As the summer recess is in August, time is short. It has been widely reported that there is a meeting at the White House today with legislators to craft a plan to get the bill over the finish line. While not explicit, the President’s calendar shows a policy meeting scheduled for 2 PM today.
Hopefully, legislation will be released this week, as there is a bigger strategic need to approve the bill to the benefit of consumers, businesses, and the economy in general.