America’s crypto market structure rules could be closer to the finish line as President Trump has reportedly agreed to at least some limits on his crypto profiteering.
On July 14, Senate Majority Leader John Thune (R-SD) told Bloomberg that, while he couldn’t offer an “exact” date, he’s committed to getting the digital asset market structure bill (CLARITY Act) to the Senate floor for a vote before the Senate’s final sitting day (August 7), after which the chamber will adjourn for its traditional summer break.
Thune expressed “hope” that a revised version of CLARITY will get Democratic support, but wouldn’t offer any predictions. Thune also suggested that he’s willing to bring CLARITY to the Senate floor even in the absence of Dem support.
CLARITY will require 60 votes for passage, meaning all 53 GOP senators (technically 52, given the ongoing hospitalization of Kentucky’s Mitch McConnell) will need to support the bill, along with sufficient Dem support to hit that magical number. It’s unclear if Thune is banking on enough Dems fearing midterm campaign blowback from deep-pocketed crypto political action committees (PACs) to take that risk.
The Dems’ primary sticking point with CLARITY remains the ‘ethics’ issue, aka the Act’s absence of language that limits or prohibits elected officials and their families from profiting off crypto businesses, given that these businesses face regulatory obstacles that officials have the power to weaken or eliminate. This issue took on new urgency following Trump’s financial disclosure documents that showed him earning well over $1 billion from various crypto ventures last year.
Last week, two GOP senators, Ohio’s Bernie Moreno and Wyoming’s Cynthia Lummis (both major crypto supporters), met with Trump at the White House to discuss potential ethics language. Crypto in America reported that White House chief of staff Susie Wiles and counsel David Warrington, Acting Attorney General Todd Blanche, and crypto advisor Patrick Witt were also in attendance.
Ahead of that meeting, Sen. Thom Tillis (R-NC) expressed hope that the two parties and the president “can come up with some agreement by the end of this week.” Tillis called the timing “critical if we’re going to try and get this across the floor before August recess.”
But Politico quoted Ruben Gallego (D-AZ) expressing dismay at the lack of Dem involvement in this presidential tête-à-tête, saying the “very weak” ethics text being shown to Trump gives “a lot of latitude to the president to continue doing his grift.” Gallego warned that “at the end of the day, we don’t have strong ethics. I don’t care what the president says. You’re not going to have the Democratic votes.”
Lummis previously promised that a new CLARITY draft would be circulated earlier this month so all pols and stakeholders could have time to consider the situation before any vote. Lummis suggested last week that this new draft could include ‘brackets’ where final ethics language would go, but the lack of a circulating new draft suggests that work is ongoing at bridging the apparent Grand Canyon-wide divide.
Sen. Mark Warner (D-VA) put a finer point on the matter last week, saying Republicans need to learn how to say ‘no’ to crypto operators. Warner claimed there had been “virtual agreement, at least from Democrats’ concerns, on most of these issues, on drafts that have been agreed to by the Republicans—and then industry is freaked out. And [Republicans] backpedal.”
On Monday, The Block quoted a source saying Thursday’s meeting ended with “no agreement on what, if any provisions Trump can get behind.” A second source corroborated this account, saying the GOP senators “couldn’t get him to agree to anything.” Trump reportedly fears future prosecutions based on his activity to date, suggesting he’s seeking retroactive immunity.
But journalist Eleanor Terrett tweeted late Monday that “the White House has agreed on an ethics package for the Clarity Act and sent the language to certain Senate Republicans this afternoon.” It remains to be seen whether anything Trump would agree to will be sufficiently robust to satisfy Dems’ concerns.
Punchbowl News’ Brendan Petersen also reported on a breakthrough on ethics language, citing “three sources familiar” with the situation. Petersen cautioned that the details “remain elusive, and Democrats have not seen text.”
Before Thursday’s meeting, four Senate Dems—Chris Murphy (CT), Chris Van Hollen (MD), Jeff Merkley (OR), and Elizabeth Warren (MA)—held a press conference on Capitol Hill to express their CLARITY opposition. The Dems were joined by actor/crypto critic Ben McKenzie and reps from Americans for Financial Reform.
Murphy voiced the view that CLARITY needs to rein in Trump’s questionable profiteering, claiming “the bill is, in and of itself, a fundamental corruption if it gives Trump’s corruption the protection of law.” Van Hollen didn’t add a qualifying ‘if,’ simply labeling CLARITY a “corrupt piece of legislation that will do a lot of harm.”
Illicit finance concerns linger
The narrow focus of some CLARITY supporters was on full display in recent comments by Kristin Smith, current CEO of the Solana Policy Institute and former CEO of the Blockchain Association (BA). Both organizations advocate on behalf of decentralized finance (DeFi) platforms.
Speaking at last week’s Injective Summit in Washington, Smith noted that while the ethics issue might be “the big elephant in the room,” she expressed hope that the two political parties could find enough common ground that would allow CLARITY to advance.
Smith said that “for my members and what we are advocating for on the Hill … look, whatever you decide on ethics, that’s really not our concern. That is politics. That’s Congress. That’s elected officials. But please don’t let it kill all the hard work that we put in the rest of the bill.”
Dems would argue that Trump’s apparent refusal to allow ethics language is the real obstacle to CLARITY’s forward progress. But in a subsequent appearance on Fox Business, Smith gave Trump “credit” for “entertaining this concept.” Smith claimed “we need to have something workable for the president,” but reiterated that it’s “really not the crypto industry’s place to decide what that deal is.”
CLARITY’s ‘illicit finance’ language, which offers developers of noncustodial DeFi platforms a degree of legal immunity when those platforms are used for criminal purposes, originally met with fierce opposition from lawmen and prosecutors, who claim it will make crypto-related prosecutions harder. And while CLARITY supporters have been trumpeting recent reversals by some law enforcement groups on those views, the Department of Justice (DoJ) appears to be sticking to its guns.
On July 16, Punchbowl News reported that the DoJ’s Criminal Division had repeated its ongoing concerns regarding the illicit finance text, saying it would “impose a higher burden of proof for prosecutions” involving money laundering charges.
However, DeFi Education Fund CEO Amanda Tuminelli claimed Punchbowl’s article “gets DOJ’s position wrong,” pointing to “recent, directly-on-point, publicly reported DOJ statements from June 23 saying the exact opposite of the supposed DOJ email cited” in the article.
Meanwhile, yet another group, the Federal Law Enforcement Officers Association (FLEOA), offered its support for CLARITY along with “targeted recommendations to strengthen the legislation and preserve essential federal law enforcement authorities.”
FLEOA wants to see “greater clarity regarding accountability within decentralized financial systems, prevent regulatory circumvention through artificial decentralization, revise the ‘specific intent’ language to the already existing knowledge standard, preserve existing criminal liability standards under federal law, and explicitly reaffirm that nothing in the legislation limits established federal investigative authorities or compliance with lawful judicial process.”
The BA’s current CEO, Summer Mersinger, was quick to celebrate the FLEOA’s announcement, but the National Sheriffs’ Association (NSA) appears far less impressed with CLARITY as it is. The NSA posted a video last week in which sheriffs called crypto “the cartel currency of choice” and demanded Congress “fix” the bill “before it’s too late.”
Feds miss GENIUS Act rulemaking deadline
July 18 marked the first anniversary of Trump signing the stablecoin-focused GENIUS Act into law. Yet, the regulatory bodies tasked with crafting the Act’s final rules missed their 12-month deadline for issuing said rules. Agencies like the Federal Deposit Insurance Corporation (FDIC), the Treasury Department’s Office of the Comptroller of the Currency (OCC), and others have released proposals for the final rules, but a cohesive final set of rules has yet to emerge.
Regardless of this delay, the GENIUS Act rules will officially take effect on July 18, 2028, as originally planned. So the two-year countdown until the day by which the market-leading stablecoin, Tether’s USDT, will have to formally withdraw access to U.S. customers is already underway.
Tether CEO Paolo Ardoino previously stated that Tether will ensure USDT meets GENIUS requirements, including that stablecoin asset reserves are held exclusively in cash and similarly redeemable vehicles like U.S. Treasury Bills. USDT’s most recent reserve ‘attestation’ showed the token is still backed by nearly $50 billion worth of non-compliant assets, including the BTC token, gold bricks, and highly controversial ‘secured’ loans.
In January, Tether launched a new U.S.-focused stablecoin (USAT) that it claims will be compliant with the new rules, leaving USDT to focus on non-U.S. markets. USAT adoption has been slow to date, with a market cap of ~$185 million, basically a rounding error of USDT’s $184 billion cap.
However, USAT’s cap has grown significantly since April, when it was still mired below $50 million. At the time, Ardoino claimed this surge represented “regulated digital dollar adoption accelerating at exactly the moment U.S. policy is beginning to catch up with market demand.”
While USDT’s U.S. clock is ticking, time has already run out for USDT in the European Union (EU) following the July 1 deadline for compliance with the continent’s Markets in Crypto Assets (MiCA) regulations. Digital asset exchanges that had yet to restrict EU customers’ access to USDT soon began cutting those ties, including OKX, which recently offered 8% deposit bonuses to EU customers seeking a “one-way” path to convert their USDT to the MiCA-compliant USDC token issued by Circle (NASDAQ: CRCL).
Survey says…
The latest blow in the ‘US voters love/hate crypto’ argument came last week via a new survey released by Crypto Watchdog, a non-profit dedicated to “educating consumers about the extreme risks involved in the cryptocurrency industry, which favors wealthy insiders, enables fraud and threatens national security and Americans’ financial stability.”
While that description sounds like the survey fix is in, Crypto Watchdog’s executive director Chapin Fay said last month that the group is “not anti-crypto. We are pro-innovation. But part of innovation is accountability.”
Crypto Watchdog launched last month with what Fay characterized as a mission to “bring sunlight to what has so far been a not very transparent industry.” The group’s advisory board includes the likes of former New York City Police Department intelligence analyst Mitch Silber and Jack St. Martin, chief of staff for the Nevada Republican Assembly Caucus.
Results of the survey, which involved Basswood Research polling 1,000 registered voters, found that 65% of respondents expressed a “high level of distrust” in crypto, while slightly more (68%) say they’re “not open to owning” tokens. The most common words that respondents associate with crypto after ‘Bitcoin’ were ‘criminals,’ ‘scammers’ and ‘fraud.’ Bullish.
Even worse, 70% believe crypto is “designed to benefit insiders and scammers rather than helping ordinary people achieve investment success.” More than four-fifths (81%) believe crypto is “easily controlled and manipulated by a small number of powerful insiders.”
The inherent volatility of digital assets convinced 81% of respondents to agree with the statement that “it’s nearly impossible to know why crypto values rise and fall because the industry lacks basic transparency.” So it’s no big shock to learn that 72% of respondents “there should be more regulation of the cryptocurrency industry,” with even 68% of current crypto owners agreeing that “more oversight is necessary to protect consumers.”
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