Senate Democrats press crypto bill over Trump ethics rules

Senate Democrats are raising the cost of passing a major crypto bill, putting a key piece of digital-asset legislation on a tighter clock before Congress leaves for its August recess. For crypto investors, the fight matters because the Clarity Act could shape which U.S. agencies police much of the market and how easily crypto businesses can operate in the country.

Sen. Elizabeth Warren of Massachusetts urged Senate leaders on Monday to add ethics restrictions to the bill that would stop President Donald Trump, his family, senior officials, members of Congress and their families from making money from the crypto industry.

In her letter to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer, Warren said crypto legislation headed to the Senate floor should include those limits. She argued that leaving them out would benefit the president and his family at the public’s expense.

Democratic scrutiny has intensified after financial disclosures showed Trump generated more than $1.2 billion in income from crypto ventures last year, according to Democratic senators who have called for hearings on the matter.

Why the Clarity Act is under pressure

The Clarity Act is a broad crypto bill that has been debated on Capitol Hill for more than a year. Industry backers say it would bring more activity into a legal framework in the U.S., which they argue would mean clearer rules for companies and investors.

Critics see a different risk. They argue the bill would weaken parts of the financial rulebook created after the Great Depression by carving out special treatment for blockchain-based assets. A carveout is an exception that lets one category of products follow different rules than others.

Several Senate Democrats, including Chris Murphy of Connecticut and Chris Van Hollen of Maryland, are expected to hold a Tuesday press conference opposing the bill in its current form. The event is expected to focus on Trump’s crypto-related income and broader concerns that the legislation would reduce financial oversight.

The Senate math is the central obstacle. The bill needs 60 votes, which means at least seven Democrats would have to join Republicans, and possibly more if GOP absences reduce the party’s available votes.

The Republican side has its own complications. Mitch McConnell of Kentucky remains hospitalized after a health issue last month, and Lindsey Graham of South Carolina died suddenly over the weekend, though he is expected to be replaced soon.

Trump invokes Graham in push for passage

Trump said Monday on Truth Social that the Senate should pass the Clarity Act in Graham’s honor, calling Graham a supporter of crypto legislation.

Graham, however, was not a central figure in Clarity Act negotiations and rarely spoke publicly about the issue. He was also the only Senate Republican to co-sponsor the 2023 Digital Asset Anti-Money Laundering Act, a bill that crypto advocacy groups criticized as highly hostile to the industry.

The calendar is now part of the policy fight. People involved in the process widely see the August recess as the deadline for passage this year, with November’s midterm elections and possible shifts in control of Congress threatening to slow or derail the bill afterward.

That leaves less than four weeks for Senate leaders to settle disputes over the bill’s language, hold together Republican support and attract enough Democrats despite rising objections from within the party.

This story draws on original reporting from Decrypt.