The Clarity Act is facing renewed resistance in the Senate as Donald Trump’s family crypto interests intensify a dispute over ethics restrictions in the digital asset bill. Bloomberg reported that Democrats are seeking stronger limits before agreeing to support the legislation, arguing that the current proposal could still allow Trump and his relatives to earn from memecoins and World Liberty Financial.

The bill is part of a broader congressional push to establish clearer federal rules for digital asset markets, including how crypto tokens and related trading activity would be overseen. That makes the ethics language politically sensitive because the legislation could shape markets in which sitting officials or their families have financial exposure.

Republicans need at least seven Democratic votes to advance the bill through the Senate, making bipartisan support essential before the measure can reach the president. Negotiators now see ethics rules as a central obstacle, along with consumer protection provisions and illicit finance controls. The dispute has lowered expectations that the bill will pass before the August recess and has reduced confidence in a deal this year.

Ethics Dispute Tests Senate Support for the Clarity Act

Senate Republicans released revised language this week in an effort to restart negotiations after months of delay. Democrats and watchdog groups rejected the proposal, saying its ethics safeguards still contain significant gaps. Their concerns focus on whether the Clarity Act would effectively restrict presidential profits from regulated crypto markets.

Under the proposal, Trump could divest his stake or place assets in a blind trust, but the draft does not require a full sale. Critics have questioned language that applies to officials with a direct interest in digital assets. Trump has exposure to World Liberty Financial through DT Marks DEFI LLC, which owns about 38% of the venture. That structure, critics say, could complicate enforcement under the proposed standard.

The draft also excludes the children of government officials. As a result, Donald Trump Jr. and Eric Trump could continue their crypto business activities under the measure. The legislation would not recover income already generated from token and memecoin ventures. Watchdog groups argue that those limitations weaken the bill’s ability to address existing conflicts.

Democrats also object to giving the Justice Department primary authority over the new ethics rules. The framework would prevent state attorneys general from serving as an independent enforcement channel. Senator Angela Alsobrooks has described ethics as the decisive issue in the negotiations. Senators Ruben Gallego and Thom Tillis are working on a possible compromise for the White House.

The calendar has added further pressure. Senate Majority Leader John Thune does not expect the Clarity Act to pass before the August recess. Negotiators still need to resolve disagreements over consumer protections and illicit finance measures. Without changes, Democrats may withhold the votes Republicans need to move the bill quickly.

Trump Crypto Business Dispute Adds to Regulatory Divisions

Ethics is not the only issue complicating the Clarity Act. Banks are seeking tighter limits on stablecoin rewards, warning that deposits could shift into yield-bearing crypto accounts. Such a move could reduce lending capacity and pressure banking profits. Tillis has discussed circuit-breaker authority for the Federal Deposit Insurance Corporation or other regulators if deposits fall sharply.

Senator Cynthia Lummis, one of the bill’s strongest Republican supporters, opposes that approach. The disagreement shows how the controversy over Trump’s crypto business overlaps with broader disputes about market structure and banking competition.

Critics have also challenged a provision that would end the ethics rules on January 20, 2029, the date of the inauguration of Trump’s successor. Opponents say the sunset clause could limit accountability after his term. Republicans argue that the proposal would impose restrictions beyond those accepted by previous presidents.

Political spending is another factor in the negotiations. Fairshake and two affiliated super PACs have raised $164 million for the midterm elections, while federal filings show they have spent $66.6 million. Crypto-friendly Democrats could face industry opposition if talks collapse, while progressives could criticize any compromise.

Senator Chris Murphy has urged Democrats to present crypto corruption as a campaign issue. Other Democrats are concerned that rejecting the Clarity Act could steer industry spending against Senate candidates.

Prediction markets also reflect the uncertainty. Traders on Polymarket placed the odds of the Clarity Act passing near one in three. That level is roughly half the probability recorded after a Senate committee backed an earlier version on May 14. The dispute over Trump’s crypto business has become a central factor in declining expectations for the bill.