A group of Senate Democrats who have generally supported cryptocurrency legislation said the latest draft of the CLARITY Act remains insufficient, citing concerns over ethics, consumer protection, illicit finance, conflicts of interest, and market integrity provisions.

The CLARITY Act is one of the most far-reaching digital asset bills to advance in Congress, designed to establish a federal framework for classifying crypto tokens as securities or commodities and to draw a clearer jurisdictional line between the SEC and CFTC. Its outcome carries significant stakes for an industry that has operated under regulatory uncertainty for years, as well as for investors and financial institutions navigating the digital asset space.

The Democrats' objections create another obstacle for a bill that already requires bipartisan support to meet the 60-vote threshold needed to advance in the Senate.

Democrats Object to Updated Draft

Senate Republicans released the updated CLARITY Act draft on July 22. It includes an ethics package negotiated between the White House and Republican Senators Cynthia Lummis and Bernie Moreno. Under the proposal, the president, vice president, members of Congress, federal judges, and certain other officials, as well as their spouses, would be barred from issuing or sponsoring digital assets for compensation while serving in office. That restriction would expire on January 20, 2029.

Covered officials would also be required to divest crypto holdings or place them in qualified blind trusts. The Department of Justice would receive civil enforcement authority, including the power to sue exchanges that list banned tokens.

After the revised text was shared with Democratic lawmakers, Senators Angela Alsobrooks, Cory Booker, Catherine Cortez Masto, Ruben Gallego, John Hickenlooper, Mark Warner, and Raphael Warnock issued a joint statement saying the ethics language and several other major sections still needed to be strengthened.

“The Republican-proposed text of the CLARITY Act as it currently stands falls short,” the senators said. “Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened.”

The lawmakers added that they had worked “in good faith” with Republican colleagues over the past year and would continue to do so until the legislation was passed.

During a public appearance, Senator Alsobrooks criticized the proposal to place enforcement solely with the DOJ, calling it “wild and unserious and stone-cold crazy.” She argued that state attorneys general should also have enforcement authority.

Securities lawyer Amanda Fischer also criticized the draft in a social media thread, writing that it “doesn’t change much at all about Trump’s existing crypto grift” because it does not require immediate divestment and leaves enforcement to Trump’s own appointee, Todd Blanche.

The Blockchain Regulatory Certainty Act language remains unchanged in the latest draft. That section preserves protections for non-custodial software developers and blockchain infrastructure providers while maintaining self-custody rights.

The negotiated stablecoin rewards compromise has also been retained. At the same time, the draft adds new law enforcement measures, including funding for blockchain investigations, training programs, a cyber center focused on nation-state threats, and procedures allowing compliant stablecoin issuers to freeze or reissue tokens when legally required.

Bill Still Faces Vote Math Challenge

The divide over the CLARITY Act is not new. The House passed its version by a 294-134 vote in July 2025, while the Senate Banking Committee advanced the Senate draft in May with two Democrats supporting it.

Securing 60 votes on the Senate floor remains a separate challenge. As CryptoPotato previously reported, the odds of passage this year were above 70% shortly after the Banking Committee vote, but had fallen to around 31% by this week.

Former CFTC Chairman Chris Giancarlo has said he believes there is a greater than 50% chance the CLARITY Act ultimately fails. However, he also argued that the SEC and CFTC have already established regulatory frameworks that would continue to support innovation even if the bill does not pass. For the crypto industry, the legislative impasse means continued reliance on a patchwork of agency rules and enforcement actions, leaving market structure questions unresolved for the foreseeable future.