Senator Lummis has released an integrated draft of the Clarity Act, merging versions from the Senate Banking and Agriculture Committees on Wednesday, July 22, 2026. However, the effort to unite this lengthy bill immediately ran into opposition.
Seven key Democratic senators - Alsobrooks, Booker, Cortez Masto, Gallego, Hickenlooper, Warner, and Warnock - issued a joint statement arguing that the draft still contains loopholes regarding ethics, conflicts of interest, and illicit finance prevention.
The fiercest debate is not about crypto itself, but rather about who has the authority to take enforcement action against federal officials.
The Red Line Over State Attorneys General Authority
At the heart of the dispute lies the authority of state attorneys general. Lummis described this authority as an absolute red line for the bill. Both senators and the White House strongly oppose the idea that they could be sued civilly or prosecuted criminally by attorneys general from other states over ethics violations.
Yet these ethics clauses are designed to bind numerous high-ranking government officials. The rules would apply to the president, lawmakers, and top federal judges ranging from district courts, appeals courts, and the Court of International Trade (CIT) to the Supreme Court, along with their respective spouses. Senator Bernie Moreno even called the clause the strongest ethics language in United States legal history.
However, Democrats see dangerous loopholes. Senator Warren pointed to Trump’s crypto ventures - which include a stablecoin issuer and a memecoin firm featuring a token named after the president - as a prime example. Warren warned that the current draft allows Trump to continue his crypto businesses, while the Department of Justice could potentially overlook any improper activities he conducts.
An Unrefined Compromise
The Senate is trying to offer options to keep discussions from stalling. They maintained provisions allowing state attorneys general to sue crypto exchanges that list assets owned by entities violating ethics rules. The non-final draft also incorporates a ban on crypto ATM scams at the direct request of law enforcement, alongside legal protections for crypto platforms freezing funds from suspicious transactions.
There is also a new balancing provision regarding commissioners. The SEC and CFTC would now be required to consult with the minority party when processing new nominations.
Senate Calendar Continues to Shrink
The biggest hurdle for the Clarity Act now is time. The bill requires at least 60 votes to pass. Meanwhile, all senators are scheduled to leave the capital on August 7 for the summer recess.
The Senate floor voting schedule is becoming increasingly uncertain. The absence of several senators attending Senator Lindsey Graham’s funeral next week has further narrowed the window for negotiations on the bill.
A crypto bill intended to bring order to digital markets is instead being held hostage by inter-agency oversight disputes. The industry’s most anticipated legislation seemingly must wait in line until bureaucratic ethics concerns are resolved.
Reported by CoinDesk.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
