Clarity Act Tightens Ethics Rules for Trump and Top Officials
The revised text bars the president and top officials from issuing or holding crypto unless it is sold or placed in a blind trust. The rules for stablecoin rewards and oversight between the SEC and CFTC have also been tightened.
Key Takeaways
- The revised Clarity Act bars the president and other top officials from issuing, sponsoring, or holding large stakes in digital assets without divestment or a blind trust.
- The draft adds civil penalties and enforcement by state prosecutors, and requires quick notice and public disclosure of divestment.
- The bill must first clear a cloture vote on Tuesday with 60 votes, after which several more votes and House approval still follow.
The new version of the U.S. Clarity Act includes stricter ethics rules for the president and other top officials. The text bars them from issuing a digital asset, sponsoring one, or holding a significant financial stake unless they divest their crypto or place it in a qualified blind trust. The timing matters, because the Senate is already set to vote on cloture Tuesday, and the bill still has several steps to go.
Stricter Ethics Rules
The revised text was made public on Monday and, according to the drafters, may be the final version before the vote. The new section says a covered individual must divest their stake or place it in a blind trust. That divestment then counts as a sale. The official involved must also notify the proper ethics office within three days, after which that office must publicly report the divestment within another three days.
The draft also adds civil penalties for the issuer and gives state prosecutors the ability to enforce the ethics rules. That broadens enforcement beyond the federal level alone. The text also removes an earlier sunset clause for that enforcement.
The Political Hurdle Is Still Big
The ethics provision was one of the biggest sticking points for getting the bill approved. President Donald Trump is said to have agreed to the revised wording by now, but that does not automatically make the path to passage easier. The cloture vote on Tuesday needs 60 votes, while both Democrats and Republicans had earlier raised objections to different parts of the proposal.
Democrats were especially worried that the earlier text was too weak to prevent conflicts of interest around Trump and his family. Some Republicans were more critical of the rules around stablecoin yield and rewards. If the bill gets through the cloture vote this week, more votes will follow before final approval can happen.
What This Means for the Market
The Clarity Act is meant to make the division of responsibilities between the CFTC and the SEC for digital assets clearer. For the crypto market, that matters because the bill is not just about regulation, but also about who in Washington can and cannot be directly financially involved in crypto. The text also bars crypto exchanges from listing digital assets issued by a covered individual, which could raise extra compliance questions for market participants.
The bill still has to go through the House of Representatives after it returns following the November election recess. The draft also includes changes around decentralized finance, the Blockchain Regulatory Certainty Act, and a temporary power for the U.S. Treasury Secretary to limit stablecoin rewards if deposit flight from community banks is identified. Earlier, the discussion over the ethics clause around Trump had already created extra tension ahead of the vote.
