The US Senate could vote on the CLARITY Act, the most significant piece of cryptocurrency regulation to reach Congress, before the August recess, but only if lawmakers resolve a dispute over whether senior government officials should be barred from profiting from the digital asset industry.
Senator Kirsten Gillibrand, the New York Democrat who has co-sponsored bipartisan crypto legislation for several years, set out three conditions at the Consensus conference in Miami on Wednesday: consumer protection language, safeguards against illicit finance and terrorism financing, and an explicit ethics provision.
The ethics clause is the sticking point.
Gillibrand said the bill would not attract the votes it needs without a ban on members of Congress, senior administration officials, presidents and vice presidents enriching themselves through insider access to the crypto sector.
She did not name President Donald Trump directly, but his ties to the industry have become a central issue in negotiations.
Trump launched his own memecoin ahead of taking office and his family is involved in World Liberty Financial, a crypto venture that has drawn scrutiny from Democratic lawmakers who argue it creates an obvious conflict of interest for a president signing digital asset legislation.
The CLARITY Act, formally the Digital Asset Market Clarity Act, would establish for the first time which cryptocurrencies are regulated as securities by the Securities and Exchange Commission (SEC) and which are treated as commodities under the Commodity Futures Trading Commission (CFTC).
That distinction matters because exchanges, wallet providers and decentralised finance (DeFi) protocols currently operate without knowing which regulator they answer to, an ambiguity that has driven some firms overseas and left others exposed to enforcement actions.
Under the bill, the CFTC would take primary authority over spot crypto markets, while the SEC would retain oversight of tokens classified as securities.
The legislation also includes requirements for exchanges to segregate customer funds from company assets, a direct response to the collapse of FTX in 2022.
The legislative path remains uncertain.
The Senate Banking Committee has not rescheduled a markup since postponing it in January, and Gillibrand said negotiators had roughly a week to close out the three outstanding issues before a committee hearing expected as soon as next week.
Senator Cynthia Lummis, the bill's lead Republican sponsor, had previously said she wanted to push the legislation through in May, a deadline that has now effectively passed.
Gillibrand predicted a final Senate floor vote could come in the first week of August "if we're lucky," the last available window before the chamber breaks for a five-week recess ahead of the midterm elections.
Prediction markets reflect the uncertainty: traders on Polymarket put the probability of the CLARITY Act becoming law by the end of 2026 at roughly 65%, while Kalshi prices the chance of passage before August at 49%.
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Summer Mersinger, a former CFTC commissioner who now leads the Blockchain Association, an industry lobby group, offered a more sanguine view at a separate panel, saying the window of opportunity may reopen even if it closes this summer.
Ripple chief executive Brad Garlinghouse was less patient, warning that lawmakers have about two weeks to act before midterm campaign dynamics make progress far harder.
The recap
- Gillibrand conditions CLARITY Act vote on ethics and protections
- Banking committee has not rescheduled markup since January
- Polymarket gives 65% chance; Kalshi puts 49% before August
