With the August deadline approaching, getting the Clarity Act through is becoming even more difficult.

Author: 小熊饼干; Source: 比推

As the summer recess approaches, Senate Majority Leader John Thune has pledged to push the full Senate to a floor vote around August 7, as the Digital Asset Market Clarity Act formally enters the sprint phase.

On July 22, Senate Republicans first released a complete updated draft of more than 600 pages, consolidating the prior work of the Banking Committee and the Agriculture Committee into one unified text. The bill aims to establish a long-term regulatory framework for crypto capital markets, decentralized finance, and stablecoins, attempting to end the industry’s long-standing period of regulatory ambiguity.

However, the legislative process has not been smooth. Intense negotiations over a key “morality clause” in the draft are heating up, with neither side willing to back down. Some observers worry that if the stalemate persists, this much-discussed bill could be swept up by increasingly looming midterm election politics, ultimately missing the window.

On one side is the industry’s demand for regulatory certainty; on the other is the political calculus in lawmakers’ hands. Whether the bill can clear hurdles before recess remains unknown.

Key dispute: the morality clause vs. Trump family interests

The most eye-catching change in this updated text is the crypto restrictions package reached through negotiations with the White House by Lummis and Moreno without obtaining the Democrats’ signature approval. The White House previously praised it as “the most comprehensive morality clause ever, with the broadest coverage,” and confirmed that Trump is willing to sign a bill that includes this clause.

1. Scope limits and hidden loopholes

The proposal bans the president, vice president, members of Congress, federal judges, and their spouses or employees from receiving compensation during their time in office by issuing or sponsoring digital assets (such as tokens). Covered officials must sell their cryptocurrencies and crypto company shares, or place them into a blind trust over which they have no control; transactions above $1,000 trigger mandatory disclosure, with the U.S. Government Accountability Office (GAO) studying remaining gaps.

But critics and Democrats point out that the clause has clear targeted avoidance and loopholes:

• Not covering immediate family: The ban applies only to officials themselves, their spouses, and their employees, without restricting officials’ children or other family members from issuing or sponsoring digital assets—meaning the president’s immediate family can still profit from crypto projects.

• “Existing assets” exemption clause: While the draft prohibits officials from using their name, likeness, image, or official position to promote digital assets, it also includes an exemption—if the digital asset was issued before the official took office, the issuer may continue to use its likeness. This exemption is clearly designed for the Trump family. Three days before his oath of office, Trump issued his personal meme coin $TRUMP . According to Forbes, in 2025 alone Trump earned about $635 million just through $TRUMP , and profited about $800 million through holding 40% of World Liberty Financial (which also issued tokens). The morality disclosures show that in the first year of Trump’s second term, he pulled in as much as $1.4 billion from crypto projects. A statement from Senator Warren’s office said the new draft is “full of loopholes,” effectively allowing Trump to keep profiting through World Liberty Financial.

• Sunset clause: The morality clause is set with a defined effective period, automatically expiring on January 20, 2029 (the day of the inauguration of the next president).

2. Who enforces: the matter of life and death between the two parties

Beyond the clause itself, who would enforce it is the biggest point of division between the two parties:

Republican + White House approach: civil enforcement authority would be fully handed to the U.S. Department of Justice (DOJ) and the attorney general, explicitly barring state attorneys general from getting involved in enforcement. For exchanges that list banned tokens in violation, the DOJ could impose fines up to $250k per day, per violation. For the violating officials themselves, it would impose recoupment of illegal proceeds plus a $500k penalty or 10%.

Democrats strongly oppose: Senate Democrats argue that, given that Todd Blanche (Todd Blanche), who previously served as the president’s personal attorney, is being nominated as attorney general, relying solely on DOJ enforcement is no different from “building a house in the air.” Maryland Democratic Senator Angela Alsobrooks (who previously supported the bill in committee) publicly criticized at a Semafor meeting the idea of unilaterally giving enforcement power to DOJ as “absurd, unserious, and outrageous,” emphasizing that given DOJ’s current situation, it cannot be fully relied on. Along with six other Senate Democrats, she issued a joint statement on Wednesday, clearly pointing out that the current draft has serious deficiencies in both the morality and enforcement provisions.

Market-level rules: preserving core consensus

Compared with the high-profile morality dispute, other core sections of the bill that target the crypto industry’s technology and market structure have not changed much, and the overall industry reaction has been relatively positive:

Developer and self-custody protections: The Blockchain Regulatory Certainty Act (BRCA) continues the May version from the Banking Committee, clearly excluding non-custodial developers and underlying infrastructure providers from the definition of “Money Transmitter”; it also preserves the Lummis-Grassley amendment for criminal accountability of those who knowingly assist unlawful transactions, and establishes the right to self-custody through the Keep Your Tokens Act.

Stablecoin yield compromise: It follows the Tillis-Alsobrooks compromise, banning interest payments on idle payment-type stablecoin balances, but allowing compliance rewards based on network activity.

Crackdown on illicit finance and bankruptcy liquidation: A newly added enforcement chapter sets up cybercrime centers targeting North Korea and Iran, provides funding support for local crypto investigations, and requires stablecoin issuers to comply with lawful orders to freeze and seize. Regarding the FTX collapse, the bill explicitly provides that in bankruptcy proceedings, customer assets must be treated as customers’ independent property and must not be included in the liquidation assets of bankruptcy custodial institutions.

Industry groups such as Grayscale say the bill will create long-term legal certainty for developers, issuers, and investors—an essential piece of infrastructure to drive large-scale adoption of public chains, stablecoins, and tokenized assets (RWA).

Market prediction data

As the legislative window narrows, market participants’ expectations for passage are showing a pronounced split and “rational” pricing. Traders generally evaluate the two stages separately: “a Senate vote” and “final signing into law”:

Probability of Senate vote: On Kalshi, the contract price for whether it can be voted on in the Senate before the August recess is around 72%, but with trading volume of only $31k, liquidity is thin.

Probability of final law: On Polymarket, the contract probability that the bill can be signed into law within 2026 is about 41% (trading volume $2.4 million); on Kalshi, a deeper-liquidity related contract probability is around 42% (trading volume $3.6 million). Neither of the two major deep-liquidity pools has priced the final passage rate above 50%. In other words, market talk about “passing has already crossed the halfway mark” reflects very optimistic expectations.

Outlook and time window ahead

At present, there are fewer than three weeks until the Senate’s summer recess:

First stage (late July–early August): Republicans need to assemble 60 votes in the Senate across party lines to clear the threshold to push it through the full Senate. Because support is needed from key Democrats such as Kirsten Gillibrand, while outside left-wing groups (such as Indivisible and Demand Progress) are actively trying to block Democrats from accepting a “weak morality agreement,” the negotiation difficulty is extremely high.

Second stage (September): If the Senate succeeds in passing it by vote, the House of Representatives will take up a revised version after reconvening in September.

Third stage (executive & regulation): After the president signs it into effect, the CFTC (Commodity Futures Trading Commission) and the SEC (Securities and Exchange Commission) will formally begin drafting the specific rules.

If the bill ultimately cannot break through before recess, the crypto industry will have to continue moving forward amid ambiguous guidance without long-term assurances from the law.