CLARITY Act ethics talks shift to state enforcement in new offer

Senate negotiators have proposed a revised ethics package for the CLARITY Act that would let state authorities enforce restrictions on federal officials' crypto activities, according to Punchbowl News. The change is meant to break a weeks-long logjam that has stalled the crypto market structure bill ahead of the August recess.

Republican Sen. Thom Tillis and Democratic Sen. Ruben Gallego submitted a counterproposal to the White House that shifts enforcement authority from the U.S. Attorney General alone to a system where state authorities can also bring actions against federal officials who issue or sponsor digital tokens. The revision directly addresses a core objection from Senate Democrats who argued that leaving enforcement solely under the Department of Justice, part of the executive branch, would not provide enough independent oversight. Barron's reported that some lawmakers wanted state attorneys general to share enforcement authority, a position that matches the new offer.

The White House said on July 22 that it had accepted what it described as the most extensive federal ethics restrictions ever proposed after earlier negotiations with Republican Sens. Cynthia Lummis and Bernie Moreno. The administration did not disclose the enforcement mechanism at that time, and several Democrats said the DOJ-only model was insufficient.

Patrick Witt, executive director of the President's Council of Advisors for Digital Assets, told CoinDesk earlier that the administration supported ethics rules applying across the federal government opposed language targeting any single official or family. The new proposal appears to sidestep that objection by broadening the enforcement base rather than naming individuals.

Gallego has repeatedly said the legislation requires stronger ethics safeguards before it can win Democratic backing. The Arizona senator 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. The concerns have focused on Trump's memecoin project and his family's involvement with World Liberty Financial.

Republicans hold an effective 52-47 majority in the Senate because Sen. Mitch McConnell remains absent for medical reasons. That means the party still needs Democratic support to reach the 60 votes required to advance most legislation. The revised ethics language is designed to pick up enough Democratic votes without losing Republican support.

Pressure has increased as lawmakers approach the Senate's August recess with limited time 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, a companion bill that would codify longstanding Treasury policy on non-custodial software developers. 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. Senate negotiators must still finalize the ethics package and secure enough Democratic votes before the legislation can move forward. The Senate has roughly three weeks of session time before the August recess.