Banning Trump from issuing coins; the U.S. Senate will likely clarify the bill and vote on it as early as next week.

Author: Yang Chen, Wall Street Insights

The U.S. Senate is advancing a major piece of crypto-cryptocurrency legislation, proposing to explicitly ban federal officials—including the President—from issuing or sponsoring digital assets, with a vote scheduled as early as next week.

On Wednesday, Republican Senator updated and released the text of the Clarity Act, which for the first time brings federal officials’ cryptocurrency activities under the scope of restrictions.

Trump has voiced approval of the bill’s ethics provisions, a development drawing significant attention—according to recently disclosed documents, within the first year of his return to the White House, Trump’s crypto-related income was about $1.2 billion.

The bill will be enforced by the Department of Justice, and violators can face daily fines of up to $250k. Senate Majority Leader John Thune said he expects the Senate to vote on the bill in the coming weeks.

Whether the bill can secure enough bipartisan support remains the biggest uncertainty. The Senate needs 60 votes to pass the bill, while Democrats have raised strong objections to the enforcement mechanism, arguing that handing regulatory power to the Department of Justice is not reliable. At the same time, the banking industry also holds reservations about the bill’s provisions involving crypto rewards.

This legislation is a milestone for the cryptocurrency industry. On Tuesday, media reported that the White House and Republican senators had reached agreement on the ethics rules in the Clarity Act, driving a temporary rise of about 10% in Coinbase that day, while crypto assets such as Circle and Bitcoin also surged in tandem.

However, with the publication of the specific provisions today, the market rally failed to sustain. As of the time of writing, Coinbase is down 5% in Wednesday trading; Circle is down 7%. In the broader crypto market, on Wednesday BTC is down 1% and ETH is down 0.1%.

Ethics provisions are the biggest point of contention

Ethics oversight arrangements are the core sticking point of this round of negotiations.

According to the bill text obtained by CNBC, the latest draft adds a clause that explicitly bans the President and federal officials from issuing or sponsoring any digital assets—marking the first time in U.S. legislative history that a clear red line has been drawn over the President’s involvement in cryptocurrency activities.

However, Democrats still have fundamental objections to the enforcement mechanism.

Maryland Democratic Senator Angela Alsobrooks stated clearly that she is not willing to support a proposal that would put crypto-ethics regulatory authority under the Department of Justice led by Trump. This week, she pointed out that Trump personally benefited by more than ten hundred million dollars in the crypto space last year, making it increasingly difficult for Democrats to support the bill politically.

Thune takes a hard line on this. "Once the text is published, we need to figure out how many changes would be needed to get to 60 votes," he said. "In any case, we need to move forward with the vote."

On the timeline, Thune said the Senate would vote on the bill "within the next few weeks," with the window falling right before Congress’s August recess. This means the time available for negotiations is quite limited. Whether the bill can bridge differences on the enforcement mechanism around the ethics provisions will be key to determining whether it can move forward smoothly.

Crypto industry backs it; banks still object

In the industry, major crypto companies such as Coinbase and Ripple have long been actively pushing for a unified national regulatory framework, and the Clarity Act is one of the key outcomes of that sustained lobbying.

The banking industry’s stance is markedly different. Multiple banking groups, including the American Bankers Association and the Financial Services Forum, jointly issued statements on the same day the updated bill text was released, saying the bill "would still endanger local lending businesses that help drive economic activity in the U.S."

Banks are especially opposed to reward mechanisms for crypto platforms similar to interest on bank deposits, arguing that this would amount to unfair competition.

Both parties still show willingness to cooperate

Despite the clear differences, some key lawmakers this week remain cautiously optimistic about reaching an agreement.

New York Democratic Senator Kirsten Gillibrand—who also serves as chair of the Democratic Senatorial Campaign Committee—along with Wyoming Republican Senator Cynthia Lummis, both said there is still room for a consensus in negotiations.

Gillibrand’s involvement is particularly noteworthy. As the head of Democratic election funding, her stance reflects, to a certain extent, the Democrats’ practical considerations about the political influence of the crypto industry, rather than a purely policy-based position.

The bill has been listed as one of the Trump administration’s priority legislative items. It aims to establish the first comprehensive regulatory framework for the digital asset market, which is of major significance for an industry that has long existed in a regulatory gray zone.

Crypto industry political funding pressures Democrats

The outlook for legislation is highly intertwined with the political capital operations of the crypto industry.

Fairshake, a political action committee supporting the crypto industry, and its two affiliated super PACs—according to federal election commission filings—have raised $164 million for this midterm election so far, with $66.6 million already spent to influence election outcomes.

Analysts say that if Democrats choose to block this industry’s priority legislation, they may face a large-scale political backlash funded by the aforementioned sources. For Democratic lawmakers who are currently in an election cycle, this pressure objectively serves as an additional incentive to support the bill.