Clarity Act Stalls as Ethics Deal Collapses, Law Enforcement Wary

Democratic lawmakers viewed the revisions as a departure from prior discussions. Negotiations ended without a breakthrough. Participants described the process as difficult. The group plans to meet again Thursday. Ethics provisions remain a central issue for Democrats seeking stronger safeguards tied to Trump's crypto business interests.

Beyond the ethics impasse, the White House Crypto Council scheduled a meeting with representatives from the National Sheriffs' Association, Fraternal Order of Police, National District Attorneys' Association, and federal agencies. The focus is Section 604, known as the Blockchain Regulatory Certainty Act, which clarifies that non-custodial software developers are not responsible for third-party misuse of their code unless they intentionally support illegal activity.

Some law enforcement groups worry the language could complicate criminal investigations on blockchain networks. Administration officials plan to argue that existing enforcement tools remain intact. Senators Mark Warner and Catherine Cortez Masto said unresolved enforcement concerns could affect their support for the legislation.

The House Ways and Means Committee turned to crypto taxes. Lawmakers reviewed six Republican-backed bills and a discussion draft covering mining rewards, staking income, reporting requirements, crypto donations, tax treatment parity, and disclosure programs. Industry participants welcomed several measures but noted the absence of a de minimis exemption for small Bitcoin transactions.

With 31 Senate session days remaining before the August recess, lawmakers face increasing pressure to resolve both regulatory and tax issues tied to the broader crypto framework.