Senators offer states enforcement role in bid to save CLARITY Act ethics clause
Tillis and Gallego send White House a counterproposal on crypto ethics enforcement as the Senate races the August recess deadline.
Bipartisan negotiators on the Senate Banking and Agriculture committees have submitted revised ethics language for the CLARITY Act to the White House, in an attempt to unlock Democratic votes for the crypto market structure bill before lawmakers leave for the August recess. According to a report by Punchbowl News, cited by both crypto.news and Cointelegraph, Republican Senator Thom Tillis and Democratic Senator Ruben Gallego have proposed shifting enforcement of restrictions on federal officials’ crypto activities away from sole reliance on the US Attorney General, allowing state authorities to police the rules as well.
The change targets a specific clause that would bar federal officials from issuing or sponsoring digital tokens. Under the original draft, enforcement rested exclusively with the Department of Justice — an executive-branch body that several Senate Democrats argued could not provide sufficiently independent oversight of ethics violations by officials within the same administration.
A sticking point since July
The ethics provisions have been the central obstacle to advancing the bill for weeks. On 22 July, the White House said it had accepted what it called the most extensive federal ethics restrictions ever proposed, following talks with Republican Senators Cynthia Lummis and Bernie Moreno. At the time, the administration disclosed neither the final wording nor how the rules would be enforced, leaving the enforcement mechanism as the unresolved question that the new Tillis-Gallego proposal now seeks to answer.
Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, had earlier told CoinDesk that the administration backed ethics rules applying government-wide but opposed provisions singling out any one official or family — a formulation widely read as a reference to President Donald Trump’s own crypto ventures.
Democrats hold the deciding votes
Senate Republicans control an effective 52-47 majority, with Senator Mitch McConnell absent for medical reasons, but need 60 votes to clear the chamber’s filibuster threshold. That arithmetic makes Democratic support essential, and many Democrats have said publicly they will not back the CLARITY Act “if it protects Trump’s dominance over an industry that he will have more control to regulate,” according to Cointelegraph.
Gallego, the Arizona Democrat, has repeatedly conditioned his support on tougher safeguards, saying protections covering “ethics, consumer protection, illicit finance, conflicts of interest and market integrity” must be strengthened before the bill can proceed. He has said he intends to keep working with Republicans to get the legislation “over the finish line.”
Treasury pushes for a vote before recess
Treasury Secretary Scott Bessent has urged the Senate to hold a vote on the CLARITY Act before the August recess, adding pressure to a timetable that is narrowing by the day. The bill, which would establish a comprehensive federal market structure framework for digital assets, has already cleared the House but requires Senate passage before it can reach the President’s desk.
For institutional participants awaiting regulatory clarity on token classification, custody and trading rules, the outcome of the ethics negotiations has become an unlikely bottleneck. Whether a state-enforcement compromise proves acceptable to both the White House and sceptical Democrats will determine whether the bill advances this session or slips into the autumn calendar.
Read more: US Treasury sanctions Iranian insurer over Bitcoin payments, publishes no on-chain proof
