The ‘final draft’ of the U.S. Senate’s crypto market structure bill is out, but most of its critics say the fixes its authors claim to have introduced still aren’t good enough to win their approval.
Late Sunday, Senate Republicans released what they’re calling the “final draft” of their digital asset market structure legislation (the CLARITY Act). You can read the entire 635-page draft here.
CLARITY is facing a high-stakes cloture vote in the Senate on Tuesday (15) that will require 60 votes to pass. Meaning, if all 53 GOP senators approve (which isn’t a given), it would still require the support of at least seven Democrats. Assuming CLARITY survives Tuesday’s tally, further debate will follow that could see significant revisions to this ‘final’ text, all within the context of a rapidly shrinking Congressional calendar.
The bill’s release came following an Associated Press report on Sunday night that claimed President Donald Trump had agreed to “about 80%” of the proposed ‘ethics’ language that Senate Democrats have been pressing for. Dems have argued that codified guardrails are required to limit public officials’ ability to profit off crypto ventures, like the president earning well over $1 billion from crypto products last year.
Sen. Cynthia Lummis (R-WY) claimed Trump had “voluntarily agreed to unprecedented ethics restrictions,” while also claiming that the new draft “includes more than 120 of Democrats’ demands.” Lummis threw down the gauntlet, saying Dems “got what they wanted; now they need to take ‘yes’ for an answer.”
However, it’s not clear that the proposed ethics revisions are sufficient to sway Dems who’ve grown tired of the president’s profiteering, along with what they perceive to be complacency by their Republican colleagues in allowing Trump’s unprecedented business dealings while in office.
For one thing, the new text still doesn’t cover children of public officials, only their spouses. As such, Trump could nominally transfer his crypto holdings into the hands of Don Jr., Eric, and Barron, all of whom are deeply involved in the crypto projects enriching the president.
The new text adds a ban on public officials’ ability to “maintain a significant financial interest” in crypto projects, requiring divestment of said financial interest with a carveout if officials place their interests “in a qualified blind trust.” (One presumably run by Trump’s sons.)
The new draft only partially addresses one of Democrats’ key objections to the previous ethics text, namely, leaving all questions of enforcement to the U.S. Attorney General (USAG), a role currently occupied by Todd Blanche, the president’s former personal attorney. Dems wanted to preserve the ability of state attorneys general to bring their own prosecutions if Blanche blanched at the idea of charging the president, a reluctance Dems believe is only too likely.
(Dems have a point. Recall that Blanche, in order to get through his Senate confirmation this summer, claimed Trump’s controversial $1.8 billion ‘anti-weaponization’ fund was ‘dead.’ Last week, Blanche’s Department of Justice appealed the court decision that blocked the fund.)
The new draft still permits only the USAG to launch enforcement actions against public officials, but does authorize state AGs “to bring an action against the Attorney General on behalf of the State or the residents of the State in an appropriate district court of the United States to obtain appropriate injunctive relief.”
While state AGs couldn’t go after Trump directly, they would be authorized to launch actions against “digital asset intermediaries” (exchanges, brokers, etc.), apparently without first having to launch a separate action against the USAG.
However, even if a less loyal USAG were installed, the new CLARITY says no actions can be brought against public officials “if the supervising ethics office … provides a legal opinion that an activity is not prohibited.” Said supervising ethics office, as pertaining to the executive branch under U.S. Code Section 13101, means the Office of Government Ethics (OGE).
Recall that within a month of his return to the White House in January 2025, Trump removed the sitting OGE director. Nearly 18 months later, the role still hasn’t been permanently filled, with the administration relying instead on a series of Trump-approved ‘acting directors’ who aren’t required to seek Senate confirmation, provided they don’t overstay their allotted ‘acting’ welcome.
Trump’s unwillingness to appoint a permanent director led one ethics watchdog to claim that “ethics, at best, is an afterthought for the Trump administration. At worst, this is an intentional disbanding of the systems that have been used in other presidencies and other administrations at least since the 1970s.”
Senate Dems not buying it
With Tuesday’s procedural vote not the final tally and several Dems being strong crypto advocates, securing 60 ‘aye’ votes seems well within the bounds of possibility. But as they say in football, that’s why they play the games.
Some high-ranking Dems on the Senate Banking Committee made it clear Monday that they were unimpressed with the new ethics text. Punchbowl News’ Brendan Petersen reported that staff from Elizabeth Warren’s (D-MA) office were “circulating points against the latest crypto ethics deal.” Warren’s memo claims that the new text “guarantees that the law could never be enforced against Trump.”
Pedersen also reported that at least two GOP senators—John Cornyn of Texas and Susan Collins of Maine—remain unsure of how they’ll vote Tuesday. Maine’s Angus King, an independent who caucuses with the Dems, said he’s likely to vote ‘no’ on CLARITY, calling the revised bill “affirmation disguised as regulation.” Jon Curtis (R-UT) said he’ll vote ‘aye’ on Tuesday, but it’s only a “vote to proceed … right now, I’m a no on passage.”
Semafor’s Eleanor Mueller quoted Adam Schiff (D-CA) saying the new ethics guardrails “don’t go far enough.” Other Dems have voiced similar disapproval, leading Lummis to tweet that “some Democrats simply won’t get to yes, no matter what we put in the text … We’ve given you everything you’ve asked for, yet you keep holding the bill hostage, demanding more and more and more. It’s beyond frustrating. There’s nothing left to give.”
On Monday, Warren ripped the new CLARITY a new one on the Senate floor, calling it a “weak fig leaf that will do nothing to stop [Trump] from making his next $1.4 billion in crypto profits.”
Warren then called for a vote on her Ending Presidential Corruption in Banking Act, which would not only ban public officials and their families from operating banks, it would also terminate all the new bank charters issued since Trump took office, including the one issued to the Trump-linked World Liberty Financial crypto project. (Suffice it to say this bill is DOA.)
Lummis, who isn’t seeking re-election come November, objected to Warren’s call for unanimous consent to proceed with immediate consideration of her bill, accusing Warren of advocating for “a surveillance state in the making.” Lummis went on to call the bill “a stain on our country” for wanting to “surveil our own people through their bank accounts.” (No, we’re not sure what she’s talking about either.)
On Sunday, Chris Van Hollen (D-MD), who co-sponsored Warren’s banking bill, tweeted his intention to thwart the ambitions of “the crypto industry & their Republican flunkies.” Bernie Moreno (R-OH) responded by slamming Van Hollen’s “tired and meaningless statements about illicit finance” and accusing his Dem colleague of failing to attend “a single meeting to discuss any of this over the last 18 months.”
Van Hollen retorted that “I can read. And what’s in this bill are loopholes that continue to enable Trump’s crypto corruption. It also doesn’t do near enough to prevent bad actors from using crypto or to safeguard American consumers … I offered several amendments to fix these issues in Committee. You and your Republican colleagues blocked them.”
Ruben Gallego (D-AZ), one of the Dems’ point persons on negotiating with the GOP over CLARITY concerns, said he planned to submit an ethics counter-proposal ahead of Tuesday’s vote, reportedly after consulting with other members of his caucus. Late Monday, Politico quoted Raphael Warnock (D-GA) saying Republicans will get this counteroffer “tonight.”
State AGs not buying it either
Monday saw the release of a letter addressed to the leaders of the Senate Banking Committee, signed by 18 state attorneys general, demanding changes to CLARITY that would preserve their right to investigate and prosecute crypto crooks. Absent these changes, the AGs urge senators to vote ‘no’ on CLARITY.
The bipartisan coalition is led by New York Attorney General Letitia James, who issued a statement saying CLARITY, as written, “would embolden scammers and potentially strip attorneys general of our authority to protect our states’ investors and their wallets.”
The AGs warn about the potential for the “pre-emption of state law” if CLARITY passes as written. CLARITY “disrespects” the balance between federal and state authority by giving the Securities and Exchange Commission (SEC) “pre-emption authority indirectly through a new ‘qualified transaction’ loophole in the Securities Act of 1933.”
It’s likely that this letter was drafted before the AGs got a look at the bill’s latest draft, but James issued a tweet long after the new CLARITY dropped, saying “as written,” CLARITY “risks limiting our authority” to protect investors’ wallets.
Stablecoins v banks still a thing
The revised CLARITY also makes a half-hearted effort to assuage banks’ concerns regarding their customers withdrawing their deposits to chase greater returns from digital asset platforms offering ‘rewards’ for engaging in certain stablecoin-related activities. Banks, particularly smaller community banks, claim this ‘deposit flight’ will reduce their capacity to issue loans.
CLARITY would give Treasury Secretary Scott Bessent, the SEC, and the Commodity Futures Trading Commission (CFTC) one year after the bill’s enactment to craft specifics of what constitutes permissible ‘reward’ payments to digital asset platform customers. This includes, controversially, “participation in governance, validation, staking, or a loyalty, promotional, subscription, or incentive program.”
Within 18 months of enactment, the Secretary would be authorized to make “a written determination that depositors at community banks have transferred interest-bearing bank deposits to payment stablecoins in an aggregate amount that has resulted in substantial detrimental impact to those deposits held by community banks specifically to the activities regulated under this section.”
Assuming such a determination is made, the Secretary would be authorized to impose a ‘circuit breaker’ by promulgating “regulations to prohibit covered parties from paying interest of yield on payment stablecoins to restricted recipients in a manner that is similar to the payment of interest or yield on an interest-bearing bank deposit.”
Bessent tweeted Monday that “ensuring that America’s community bank sector continues to thrive has been a constant focus of mine since day one … If stablecoins cause harm to community banks, I will not hesitate to use these tools to ensure they remain fully protected.”
And yet, Bessent is a staunch advocate for stablecoins making greater inroads into America’s financial sector, including as a means of propping up the dollar via stablecoin issuers buying massive quantities of U.S. Treasury bills as reserve assets. As such, he might not be all that incentivized to stop stablecoin growth, even if it reduces community bank loans.
Other administration figures haven’t been shy in publicly accusing banks of crying wolf, with White House crypto adviser Patrick Witt tweeting Monday that “if the deposit flight myth were real, it would have already occurred. Instead, data shows bank deposits are going up, not down.” Witt praised the new CLARITY’s ‘circuit breaker,’ saying it would come in handy “in the event the boogeyman of deposit flight materializes.”
On September 10, Witt engaged in a social media dustup with a community banking advocate in which Witt said, “the changes the banks are demanding [to CLARITY] now aren’t new ideas. They were considered, and they were rejected.” Witt called it “disappointing to see the banks attack this bipartisan compromise because they didn’t get everything they wanted.”
That same day, the American Bankers Association (ABA) sent a letter to Congress co-signed by numerous state-level and community banking groups that recommended specific changes to CLARITY’s stablecoin text to ensure that prohibitions on activities deemed harmful to bank deposits “cannot be evaded through creatively structured incentives.” These requested edits don’t appear in the latest CLARITY draft.
Following the release of CLARITY’s latest draft, eight U.S. banking sector associations penned a joint letter to Senate leadership saying the new text “provides loopholes that would still allow interest and interest-like payments to be made on stablecoin balances.”
The banks are equally dismissive of Bessent’s promise to shut the barn door after the deposit cows have bolted, saying “a circuit breaker that activates only after substantial deposit flight is not a safeguard at all.” The banks offered their preferred solutions, which are identical to the edits requested in last week’s letter.
On Monday, Independent Bankers Association of Texas CEO Christopher Williston VI tweeted that CLARITY’s new draft was “a meaningless nothing offered on the yield issue. This is a joke.”
DeFi devs not loving BRCA tweaks
CLARITY’s latest draft also tweaks language related to decentralized finance (DeFi), including the section known as the Blockchain Regulatory Certainty Act (BRCA). The new language would clarify that developers of non-custodial DeFi platforms aren’t ‘money transmitters,’ adding to previous exemptions from being classified as ‘money transmitting businesses.’
But the revised BRCA’s text no longer references Section 1960 of Title 18 of the U.S. Criminal Code, which prohibits money transmitting without a state or federal license. In Sen. Lummis’s list of ‘126 Democratic wins’ in the new CLARITY, she cites this BRCA tweak, “which restricts developer protections to civil only, including [for violations of] the Bank Secrecy Act.”
The Coin Center advocacy group’s policy director Jason Somensatto issued a response to the new text expressing his disappointment with the removal of the blanket protection against criminal liability for developers when the platforms they build are used by bad actors for criminal purposes. Somensatto called this “a tough pill to swallow.”
Somensatto pointed out that the federal prosecutions of the developers of coin mixing services Tornado Cash and Samourai Wallet under the Biden administration both relied on Section 1960. In 2025, then-acting USAG Blanche directed federal authorities to stop bringing these prosecutions in the absence of evidence that devs “knowingly” broke the law. But Blanche’s word isn’t law, meaning Section 1960-based prosecutions could be brought under future administrations.
Interestingly enough, the new BRCA also appears to have deleted language requiring prosecutors to prove that developers had a ‘specific intent’ to transfer funds known to be derived from the proceeds of crime or “intended to be used to promote or support unlawful activity.”
Speaking Monday at the Solana Policy Institute event in Washington, BRCA co-author Rep. Tom Emmer (R-MN) expressed concern over the text changes, saying he didn’t like “the fact that you are giving up that safe harbor on the criminal side. I worry about state attorneys general making this more of a weaponization-type thing.”
On a more positive note, the BRCA’s new protections would extend to block reward miners and proof-of-stake network transaction validators (like on Ethereum, Avalanche and Arc).
Tribes v prediction markets
Finally, America’s tribal gaming operators are expressing their ongoing frustration at Senate Republicans’ failure to include language in CLARITY that would prohibit prediction markets—aka designated contract markets (DCMs) licensed by the CFTC—from offering ‘event contracts’ on sports events, or what the rest of the world calls ‘sports betting.’
Tribal gaming operators, along with their commercial counterparts, have repeatedly pressed Congress re the need to expressly prohibit the offering of sports betting without state gaming licenses. On Monday, Indian Gaming Association (IGA) chairman David Bean issued a statement expressing regret that the new CLARITY is much like the old CLARITY, in that it fails to “address the concerns of Indian country.”
Bean said that “until text is added to expressly provide that State, Tribal gaming laws, and the Indian Gaming Regulatory Act, are not pre-empted by federal commodities law … Indian Country will continue to vote against the CLARITY Act and view its enactment as the greatest threat to Tribal Sovereignty in a generation.”
Bean said that if Sen. Lummis had “consulted with Indian gaming before issuing this draft, we would have told her that the proposed decentralized finance ‘fix’ does not sufficiently address our concerns.” Lummis replied that this was “totally false,” saying she’d met with the IGA and Bean and they “did not express opposition” to her fix.
Longtime tribal gaming observer Victor Rocha responded to the senator’s claims by saying Lummis “basically came in with a ‘trust us, bro!’ argument. We didn’t trust her.”
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