Warren's TRUMP Memecoin Probe Hits Clarity Act Ethics Fight

The SEC has already ruled memecoins as generally outside its sphere of influence. In one of the early staff crypto statements after the Trump administration took over, the agency declared that memecoins have "limited or no use or functionality" and don't check a box as securities under the law.

The ability for a government official such as President Trump to issue such a token sits at the center of the negotiation over the ethics section of the Clarity Act. Trump recently agreed to be subjected to a limit, though the restrictions he agreed to would have very narrow practical effect. Democrats refused the approach and said they'd oppose the legislation unless that provision was made stronger, so Senators Thom Tillis, a Republican, and Ruben Gallego, a Democrat, negotiated a tougher version. The rewrite was sent to the White House last week, which hasn't yet responded days later.

Spokespeople for the White House didn't immediately respond to CoinDesk's questions about its current stance.

If a new agreement isn't quickly struck that can convince as many as 10 Democrats to support the bill, Senate Majority Leader John Thune's plan to begin the Senate voting process for the Clarity Act this week could lead to a fatal defeat.

Warren, a Massachusetts Democrat, is the top minority-party member of the Senate Banking Committee, though she's been outside of the negotiations over the Clarity Act that she's steadily opposed. If Democrats get the electoral bump they're anticipating in this year's midterm congressional elections, there's a narrow chance for her party to return to the majority in the Senate. If so, Warren would likely run the banking committee, which oversees the SEC and has a hand in most crypto legislation.

"The SEC must be willing to enforce the law even when potential wrongdoers include those with powerful political connections," she and Blumenthal wrote in the letter.