Ethics fight, law-enforcement concerns stall Clarity Act

Negotiations over ethics provisions and objections from law-enforcement groups have stalled the Clarity Act’s advance in the Senate. A closed-door ethics agreement collapsed this week and lawmakers remain short of the 60 votes needed, with 31 session days left before the August recess.

Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno and Cynthia Lummis met behind closed doors with Patrick Witt, executive director of the White House Crypto Council, to try to resolve language on ethics enforcement. Republican senators and White House officials moved to remove a provision that would let state attorneys general sue the Department of Justice for failures to enforce ethics rules tied to President Donald Trump’s crypto holdings, which are estimated to have generated about $2.3 billion. Republicans proposed limiting enforcement authority to the U.S. Attorney General and suggested impeachment as an alternative remedy; Democratic members rejected those changes. Participants planned to reconvene.

Representatives of the National Sheriffs’ Association, the Fraternal Order of Police and the National District Attorneys’ Association met with officials from the Department of Justice, Treasury and FinCEN to raise concerns about Section 604, known as the Blockchain Regulatory Certainty Act. Law-enforcement officials warned that the provision’s current wording could make it harder to track, investigate and prosecute criminal activity that uses blockchain systems, including money laundering.

Virginia Senator Mark Warner and Nevada Senator Catherine Cortez Masto have tied their support to assurances that the bill will not impede criminal investigations. Other lawmakers are focused on how the legislation defines on-chain activity and where regulatory and investigative authority will lie.

The bill must secure 60 votes to reach a Senate floor vote. With 31 session days before the August recess, leaders face a compressed timeline to reconcile the ethics language and technical law-enforcement concerns. Prediction markets place the Clarity Act’s odds of passage in 2026 at about 48 percent, down from roughly 74 percent a month ago.

The Clarity Act aims to define which digital assets fall under securities law and to set rules for on-chain activity and developer liability. Sponsors and administration officials plan further negotiations to resolve the ethics and Section 604 disputes before the recess; the outcome will determine whether the measure can reach the 60 votes needed to advance.