CLARITY Act faces 37% passage odds as Senate Democrats demand ethics rules

The Crypto Clarity Act enters its most critical stretch with less than four weeks before the August recess, as Senate Democrats demand ethics provisions barring President Trump and senior officials from profiting off digital assets.

The Crypto Clarity Act, the landmark market structure bill already passed by the House, faces a narrowing path to enactment as Senate Democrats intensify opposition over an ethics provision that would bar President Donald Trump, senior administration officials and members of Congress from profiting off the crypto industry, according to Politico. Prediction market odds on Polymarket have fallen to 37%, the lowest level since the bill was introduced, reflecting growing skepticism about its passage before the August recess.

"The crypto legislation heading to the Senate floor must prevent the president, vice president, senior administration officials, members of Congress, and their families from profiting off the crypto industry," Senator Elizabeth Warren, a Massachusetts Democrat, wrote in a July 13 letter to Senate Majority Leader John Thune and Minority Leader Chuck Schumer. "Anything less would be a flagrant giveaway to the president and his family at the expense of the public."

The president's 2025 financial disclosure revealed approximately $1.4 billion in crypto-related income, according to filings cited by Warren. The merged draft combining the Banking and Agriculture committee texts omits the ethics provision entirely, and Senator Kirsten Gillibrand has said enforceable language covering officials' crypto holdings is a prerequisite for Democratic support. The bill needs 60 votes in the Senate, requiring at least seven Democratic crossovers, but only two Democrats currently back the legislation.

Failure to pass the bill before the August recess could defer market structure legislation until 2030, Senator Cynthia Lummis has warned, leaving the industry under a regime of regulation by enforcement. The House is in session only through July 23, and once Congress returns in September, roughly three weeks of session remain before lawmakers enter campaign mode ahead of the midterm elections.

Ripple's CLARITY Act advocacy truck returned to Washington, D.C., on July 18, as the payments company renewed its push for the legislation. The campaign underscores the high stakes for the crypto sector: the bill would establish whether digital assets fall under Securities and Exchange Commission or Commodity Futures Trading Commission jurisdiction, resolving the foundational classification question that has plagued the industry for years.

Four disputes block the bill's path

Beyond the ethics provision, three additional disputes remain unresolved. The Blockchain Regulatory Certainty Act, embedded as Section 604, would shield non-custodial software developers from money transmitter obligations — a provision the National District Attorneys Association argues would impair criminal investigations. Senators Mark Warner and Catherine Cortez Masto have tied their support to law enforcement sign-off.

Banking trade groups contend the bill creates a loophole allowing digital asset platforms to offer interest-equivalent rewards outside the GENIUS Act's prohibition on issuer-paid stablecoin interest. Meanwhile, the CFTC, which would gain jurisdiction over digital commodity spot markets under the bill, has operated with a single commissioner since December, and the SEC carries two vacancies. Senator Amy Klobuchar proposed an amendment preventing the framework from taking effect until at least four CFTC commissioners are confirmed.

The vote math has tightened further. Senator Lindsey Graham died at 71 over the weekend, and Senator Mitch McConnell has missed votes during an ongoing medical issue, narrowing an already thin Republican majority. Senators Josh Hawley and Rand Paul, the only Republicans to vote against the GENIUS Act, are expected to oppose CLARITY as well, according to Galaxy Digital's Alex Thorn.

White House crypto advisor Patrick Witt, the administration's lead negotiator on the bill, is taking a month-long military leave for Army National Guard JAG training, with deputy Harry Jung taking over negotiations. The departure comes at the most critical stretch for the legislation.

This article is for informational purposes only and does not constitute investment advice.