Senate negotiators have reportedly proposed revised ethics language for the CLARITY Act that would let state authorities enforce restrictions on federal officials’ crypto activities as bipartisan talks continue before the August recess.
Summary
- Senators Thom Tillis and Ruben Gallego have reportedly proposed new CLARITY Act ethics rules that would allow state authorities to enforce restrictions on federal officials’ crypto activities.
- The reported changes address Democratic concerns over leaving enforcement solely to the Department of Justice.
- The revised ethics proposal comes as Senate negotiators continue seeking enough Democratic support to advance the crypto market structure bill.
- Treasury Secretary Scott Bessent has urged the Senate to vote on the CLARITY Act before the August recess as time to pass the legislation narrows.
According to Punchbowl News, Republican Sen. Thom Tillis and Democratic Sen. Ruben Gallego have submitted a counterproposal to the White House that changes how the ethics provisions in the Digital Asset Market Clarity (CLARITY) Act would be enforced.
Instead of giving the U.S. Attorney General sole enforcement authority, the proposal would allow state authorities to enforce a ban on federal officials issuing or sponsoring digital tokens.
The reported revision addresses one of the main concerns raised by Senate Democrats during negotiations over the crypto market structure bill.
Ethics enforcement has remained a sticking point
Debate over ethics rules has continued for weeks despite earlier progress between the White House and Senate Republicans.
The White House said on July 22 that it had accepted what it described as the most extensive federal ethics restrictions ever proposed after negotiations with Republican Sens. Cynthia Lummis and Bernie Moreno. At the time, however, the administration did not disclose the final wording or explain how the provisions would be enforced.
Several Democrats argued that leaving enforcement solely to the Department of Justice would not provide enough independent oversight because the department falls under the executive branch. Barron’s previously reported that some lawmakers wanted state attorneys general to share enforcement authority, a position that closely matches the latest reported proposal.
Earlier in the negotiations, Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, told CoinDesk that the administration supported ethics rules applying across the federal government but opposed language targeting any single official or family.
CLARITY Act still needs Democratic votes
Gallego has repeatedly said the legislation requires stronger ethics safeguards before it can secure Democratic backing.
The Arizona senator previously said protections covering ethics, consumer protection, illicit finance, conflicts of interest and market integrity “must be strengthened,” adding that he would continue working with Republicans to get the bill across the finish line.
Many Senate Democrats have also warned they will not support the CLARITY Act if they believe it allows President Donald Trump to retain influence over an industry his administration would regulate. Their concerns have focused on Trump’s memecoin project and his family’s involvement with World Liberty Financial.
Republicans currently hold an effective 52-47 majority in the Senate because Sen. Mitch McConnell remains absent for medical reasons. Even so, the party still needs Democratic support to reach the 60 votes required to advance most legislation.
White House faces pressure before the August recess
Pressure has increased as lawmakers approach the Senate’s August recess with limited time remaining to move the legislation.
Treasury Secretary Scott Bessent called on senators earlier this week to hold a vote on the CLARITY Act before leaving Washington, arguing that lawmakers should publicly state where they stand on the crypto market structure bill.
Bessent also defended the Blockchain Regulatory Certainty Act, saying it would codify longstanding Treasury policy on non-custodial software developers rather than weaken anti-money laundering enforcement. Law enforcement groups, including the National Fraternal Order of Police and the Major Cities Chiefs Association, later backed the revised language after earlier raising concerns.
The House approved its version of the CLARITY Act in July 2025 with bipartisan support, but Senate negotiators must still finalize the ethics package and secure enough Democratic votes before the legislation can move forward.