Seven Senate Dems Reject CLARITY Act as Ethics Fight Boils Over

A bipartisan deal on crypto market structure stayed out of reach July 22 after seven Senate Democrats rejected the latest Digital Asset Market Clarity Act draft, saying it does not go far enough on ethics, consumer protection, and illicit finance rules.

Senators Catherine Cortez Masto (D-NV), Angela Alsobrooks (D-MD), Cory Booker (D-NJ), Ruben Gallego (D-AZ), John Hickenlooper (D-CO), Mark Warner (D-VA) and Raphael Warnock (D-GA) said the Republican-drafted text "falls short." Provisions covering ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened, they said. The group added they have been "working in good faith with our Republican colleagues for the past year and will continue doing so to get this over the finish line."

The objection came hours after Senator Cynthia Lummis (R-WY) and Senate Republicans released updated legislative text for the bill, which merges portions from the Senate Banking and Agriculture committees. The proposal would establish a federal regulatory framework for digital assets and clarify oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Senate Banking Committee approved an earlier version in May by a bipartisan 15-9 vote.

The revised bill would prohibit the president, vice president, members of Congress, federal judges and other federal officials, along with their spouses, from issuing or sponsoring digital assets for compensation. Violators could be required to surrender profits and pay civil penalties. Digital asset intermediaries that knowingly list prohibited tokens could face fines of up to $250,000 per violation per day.