Senate’s New CLARITY Act Ethics Rule Is Built to Expire

Senate Republicans released a new 616-page draft of the CLARITY Act on Wednesday, adding an ethics clause that bars President Trump and other federal officials from launching crypto tokens. The restriction expires automatically at noon on January 20, 2029, the exact hour Trump’s term ends.

Democrats are still not sold. Sen. Angela Alsobrooks, a Maryland Democrat, called the bill’s enforcement plan “wild and unserious and stone-cold crazy” within hours of the text landing, and Polymarket traders cut the odds of the bill becoming law this year to 39%, down from above 50% just days earlier.

Two Fixes, One 616-Page Draft

The Digital Asset Market CLARITY Act is the Senate’s attempt to settle a long argument over which regulator polices crypto, splitting jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The updated text merges the Senate Agriculture and Senate Banking committee versions into one package, according to The Block, which said the draft runs 616 pages. Brendan Pedersen, a reporter who covers financial policy, posted the first excerpts of the draft text as Republicans circulated it to industry stakeholders Wednesday.

Democrats pushed for the ethics clause after financial disclosures showed Trump earned up to $1.4 billion from crypto last year. The dispute traces back to his own ventures, including the TRUMP memecoin and his family’s stake in World Liberty Financial, a crypto venture that has drawn scrutiny from ethics watchdogs.

The new section spells out who is covered and what they can and cannot do:

• Who is covered: the president, vice president, members of Congress, federal judges and their spouses, but not adult children
• What is banned: issuing or sponsoring a new crypto asset for compensation while in office
• What is still allowed: holding or investing in existing crypto, subject to current disclosure rules
• How compliance works: divesting crypto holdings, moving them into a blind trust, or both
• Who enforces it: the Department of Justice, with regulators given up to a year after enactment to write the implementing rules

A second new section responds to an entirely separate complaint. Law enforcement groups had warned that the bill’s developer safe harbor would make crypto crime harder to prosecute, and Wednesday’s draft adds language meant to blunt that objection.

A Standard Trump Chose to Hold Himself To

Sen. Cynthia Lummis, the Wyoming Republican who helped negotiate the ethics deal, released a fact sheet framing the expiration date as deliberate rather than accidental.

That this is a standard President Trump chose to hold himself to, not one Congress imposed on him.

Lummis wrote that line to describe the sunset clause, according to The Block. The distinction carries weight. A permanent conflict-of-interest law would bind every future president, senator and judge regardless of party. This version runs out with the current term, and Congress would have to vote again to extend or replace it.

Timing adds a second complication. Regulators get up to a year after enactment to finish the rules that make the ethics section enforceable, under language reviewed by Coindoo. If the Senate takes months to pass the bill and agencies use most of that year, the stretch in which the restriction is actually in force could run far shorter than the roughly two and a half years left before the 2029 sunset.

Why Are Democrats Still Voting No?

Democrats say handing enforcement to the Justice Department alone is not enough, and they want state attorneys general given the power to act too. Sen. Alsobrooks has said she will vote no on the bill in its current form even with the ethics language attached, which keeps the CLARITY Act short of the 60 votes it needs on the floor.

Alsobrooks aired the objection at a Semafor conference this week, calling the DOJ-only structure “wild and unserious and stone-cold crazy.” Speaking to reporters, she went further, according to Forbes: “It’s an absolute that we cannot completely rely on the DOJ, given what we’ve seen of their inability and their unwillingness to enforce the law.” She wants state-level attorneys general written into the bill instead.

Polymarket odds already crashed once this month after Democrats’ rejection of the DOJ-only plan, and the same argument over who polices the rule is back with this new draft in hand.

• Sen. Cynthia Lummis (R-Wyo.): says Justice Department enforcement paired with a self-imposed presidential pledge is sufficient, and frames the sunset as proof Trump volunteered the standard rather than needing outside policing.
• Sen. Angela Alsobrooks (D-Md.): says DOJ enforcement alone cannot be trusted and wants state attorneys general given concurrent power to bring cases.
• Sens. Catherine Cortez Masto and Mark Warner: have tied their votes to a separate demand, that law enforcement groups sign off on the bill’s illicit-finance language before they back it.

Sheriffs and Coders Clash Over Section 604

The second new section in Wednesday’s draft targets a fight that has nothing to do with Trump’s personal holdings. It centers on Section 604, formally the Blockchain Regulatory Certainty Act, which shields non-custodial software developers from being classified as money transmitters if they never control customer funds.

Four law enforcement coalitions, representing more than 70,000 officers and prosecutors, wrote to the administration warning the provision could shield mixers and DeFi platforms from anti-money-laundering checks that traditional banks must follow. The National Sheriffs’ Association, the National District Attorneys Association and the International Association of Chiefs of Police signed that letter. The Major County Sheriffs of America moved to a neutral position in early July after further talks, though it still wants state law enforcement included in a Treasury study of illicit finance in decentralized finance, according to Tech Times. A coalition of Catholic organizations raised a similar warning, arguing the provision could weaken safeguards against trafficking.

The industry disagrees. TRM Labs, a blockchain intelligence firm, published a section-by-section review concluding that the safe harbor preserves the criminal carve-out used to prosecute the Helix mixer case, meaning it does not shield anyone who knowingly moves criminal proceeds. The DeFi Education Fund, an industry advocacy group, makes a similar case in a myth-versus-fact rebuttal of the loophole claims, arguing federal money laundering statutes already give prosecutors the tools they need.

Traders Still Call It a Coin Flip

Prediction markets have swung hard on this bill for months, and Wednesday’s draft has not settled the argument. A Polymarket contract asking whether the bill is signed into law before the end of 2026 has traded through a wide range this year.

A separate Kalshi contract asks a narrower question, whether the Senate holds a recorded vote before the August recess. Kalshi traders priced those odds at 67.8%, roughly 29 points higher than Polymarket’s confidence in the bill actually becoming law this year. That contract also carries a $3.1 million market betting on crypto market-structure law landing before April 2027, at 61% odds.

What Has to Happen Before August 8

Majority Leader John Thune has not formally scheduled floor time for the bill, according to Tech Times. The Senate needs 60 votes to beat a filibuster, and no Democrats are on record supporting the current draft. That leaves Republicans with days to find seven Democratic votes before the Senate’s early-August floor vote deadline, after which the calendar pushes any vote into the fall.

Stablecoin yield rules remain a separate flashpoint inside the same bill. Coinbase already rejected an earlier stablecoin yield compromise in this legislation, and banking industry objections to a related “securities intermediaries” definition remain active, according to Tech Times.

Cody Carbone, chief executive of the Digital Chamber, a crypto trade association, called the new draft “a meaningful step toward the Senate vote on the Clarity Act we’ve been calling for,” in a statement reported by Decrypt. Whether that step moves a single Democratic vote is a question the Senate has only days left to test.

Disclaimer: This article is for informational purposes only and is not investment, legal or political advice. Crypto legislation and prediction market odds can change quickly, and the figures above are accurate as of publication.