Senate Democrats have sharply rejected the ethics provision in the latest draft of the Clarity Act, while Senate Majority Leader John Thune said Thursday that the crypto market-structure bill may not pass before the August recess. The legislation, which would establish a framework for classifying digital assets and clarify the regulatory boundaries between the SEC and CFTC, represents one of the most consequential pieces of crypto policy to reach the Senate floor in years.

"Whatever piece of s–t they sent back to us, that was not a serious effort," Senator Ruben Gallego of Arizona told Politico, criticizing Republicans for turning months of negotiations into language he said was far from an agreement. Gallego said he is working on a counteroffer with Senator Thom Tillis of North Carolina "and other Republicans that are not being named right now."

"We are still in this fight," Gallego said. "We are going to send back language."

The dispute is focused on enforcement. Democrats say they will not accept an ethics provision that makes the Department of Justice the sole enforcer, a position tied to distrust of the Trump Justice Department's ability to police the president. Earlier negotiations had faltered over what role state attorneys general would have in enforcing the rules.

The Republican language came from an agreement between the White House and Republican Senators Cynthia Lummis and Bernie Moreno. Lummis defended the proposal, saying in a statement that "President Trump is supporting the most robust ethics rules ever imposed on the office of the presidency."

Under the new draft, federal officials would be barred from issuing digital assets, and the provision would sunset in 2029. The White House has urged Democrats to accept the language. Tillis described the White House-approved language as "good," but acknowledged that "the baseline… falls short of what some of the Democrats want," and said one more discussion with the White House is expected.

The ethics dispute stems from President Trump's crypto ventures, which a July disclosure linked to more than $1 billion in income over the past year. A group of seven Democrats led by Angela Alsobrooks said this week that the text "falls short" on consumer protection, illicit finance, and conflicts of interest.

The Clarity Act faces a 14-day August deadline

Thune lowered expectations for the bill's timing. Industry and congressional negotiators had identified August 7 as the date by which the legislation needed to clear the Senate to have a realistic chance of passage this year.

"I don't think we'll be able to get them done," Thune told reporters, referring to the Clarity Act and a separate college-sports bill. "I would like to at least get Clarity started. We'll see where the votes are."

If the Senate begins work on the bill before the recess, it would leave lawmakers with a narrow window in September, when midterm campaigning and other priorities are expected to compete for floor time. Thune's staff pointed to a Russia sanctions bill championed by the late Senator Lindsey Graham as the next item in line for floor consideration.

White House crypto adviser Patrick Witt disputed Thune's assessment, telling CoinDesk he was "perplexed" and "slightly more optimistic," with the first week of August still available.

The Clarity Act has gone through months of bipartisan negotiations, and the House passed its version in July 2025. In addition to the ethics language, some Republicans have raised concerns about the treatment of stablecoin yield. Goldman Sachs, one of the bill's backers, is on the opposite side of JPMorgan in a Wall Street split over the measure — a divide that reflects broader uncertainty among traditional financial institutions about how the new rules would affect their growing digital asset businesses. Galaxy Research has reduced its odds of passage to 50-50.

The original Bitcoin Magazine report was written by Micah Zimmerman.