Senate Republicans Unveil Final CLARITY Act Draft as Trump Backs Crypto Ethics Rules

The CLARITY Act is intended to create a federal framework for digital-asset markets and divide oversight between the Securities and Exchange Commission and Commodity Futures Trading Commission, addressing years of uncertainty over whether tokens and trading venues fall under securities or commodities rules. The Senate Banking Committee advanced its version in May 2026 by a bipartisan 15-9 vote. The bill would shape investor safeguards, market integrity and illicit-finance controls while determining how US crypto companies operate.

On July 22, 2026, Senate Republicans released text combining work by the Banking and Agriculture committees. Democratic Senators Catherine Cortez Masto, Angela Alsobrooks, Cory Booker, Ruben Gallego, John Hickenlooper, Mark Warner and Raphael Warnock said the draft still fell short, demanding tougher provisions on official ethics, consumer protection, illicit finance, conflicts of interest and market integrity. The dispute threatens floor action before the August recess because Senate leaders need 60 votes to clear procedural hurdles, making Democratic support essential.

The CLARITY Act is a central part of Congress’s effort to establish a federal framework for digital assets and reduce regulatory uncertainty for crypto markets, businesses and technology providers. Its treatment of software developers is especially important because broad liability could expose builders of non-custodial tools and decentralized infrastructure to rules designed for financial intermediaries, potentially discouraging innovation in the United States.

The U.S. Senate released its latest version of the legislation with protections for software developers and a new ethics provision as lawmakers continued work on a broader crypto package. The ethics rules include a sunset date in 2029, meaning Congress would need to revisit whether they should be extended or revised. The additions mark the latest step in negotiations over the scope, safeguards and political durability of U.S. digital-asset legislation.

The Digital Asset Market Clarity Act would establish a federal framework for crypto trading and divide oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, addressing years of uncertainty over whether tokens are securities or commodities. The House passed H.R. 3633 by 294-134 on July 17, 2025. In the Senate, where 60 votes are needed to overcome a filibuster, conflict-of-interest restrictions became central to securing Democratic support amid scrutiny of President Donald Trump’s memecoin and his family’s World Liberty Financial business.

After talks with the White House, Senate Republicans released revised language on July 22, 2026, barring the president, vice president, members of Congress, federal judges, other covered officials and their spouses from issuing or sponsoring digital assets for compensation while in office. The Justice Department would enforce the rule, which expires at noon on January 20, 2029, and does not prohibit crypto investment. Bitcoin climbed above $66,000 on July 21 to a seven-week high as the agreement raised expectations the bill could advance before the August recess.

The Digital Asset Market Clarity Act would create the first comprehensive U.S. federal framework for crypto markets, dividing oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. The House passed an earlier version 294-134 on July 17, 2025. In the Senate, however, ethics became a central obstacle after Trump's disclosures showed more than $1.4 billion in crypto-related income in 2025, intensifying scrutiny of World Liberty Financial and other family-linked ventures.

Trump agreed on July 20 to accept an ethics provision, and Senate Republicans circulated draft text on July 22. It would temporarily bar the president, vice president, members of Congress and federal judges from issuing or sponsoring cryptocurrencies, with Justice Department enforcement, a maximum $500,000 civil penalty and a sunset at the start of 2029. Democrats still want state attorneys general empowered to act. The bill needs 60 Senate votes, while Majority Leader John Thune said passage before the August 7 recess was unlikely.

The Digital Asset Market Clarity Act, or CLARITY Act, would establish how the Securities and Exchange Commission and Commodity Futures Trading Commission divide oversight of digital assets, a long-sought framework for the crypto industry. Its path through the Senate has been complicated by Democratic demands for an ethics provision restricting the president and other senior officials from profiting from crypto ventures, making bipartisan support central to passage.

President Donald Trump urged senators to honor the late Lindsey Graham by passing the CLARITY Act, casting the Republican senator as an ally of the crypto sector. Graham’s death reduced the Republican conference from 53 seats to 52, meaning at least eight Democrats would be needed to reach a 60-vote threshold if all Republicans backed the measure. After July 19, Polymarket odds of passage rose to 43% on unverified reports that Trump had accepted an ethics compromise, while crypto markets rallied on signs of progress.

The CLARITY Act seeks to establish a US crypto-asset market structure framework and clarify the division of regulatory authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission. If the bill reaches the full Senate, it would typically need at least 60 votes to advance, making bipartisan cooperation critical to its prospects of becoming federal law. Current polling shows that most voters support clear cryptocurrency rules.

Coinbase Vice President of Policy Kara Calvert said at Consensus 2026 that the Senate Banking Committee could take up the bill as early as the following week. The committee subsequently scheduled a markup for May 14 and voted to advance the CLARITY Act. The bill must still clear a full Senate vote, while lawmakers' dispute over crypto-asset ethics rules for government officials could affect the final timetable and bipartisan support.

The U.S. Congress is advancing the CLARITY Act to establish a market structure for crypto assets and divide regulatory responsibilities. Democrats warn that the bill could create conflicts of interest unless it restricts senior government officials and elected officials from holding industry interests. The dispute includes President Donald Trump’s crypto ventures and profits from memecoins.

Senator Kirsten Gillibrand recently said the bill cannot advance in the Senate without an ethics ban covering officials. Democrats have also proposed barring elected officials from issuing memecoins, citing the reported $636 million in profits obtained by Trump. The White House plans to advance the bill in June, with a vote possible as early as August.

The US Congress is considering the CLARITY Act, which seeks to clarify regulatory responsibilities for digital assets and trading platforms and reduce legal uncertainty for crypto companies. Senator Cynthia Lummis says clear rules are critical to bringing businesses back to the United States and preserving the country’s leadership in financial technology.

Lummis warned that this week could be the United States’ last critical opportunity to advance the CLARITY Act before 2030. She said China could otherwise write the rules for a new financial era. Negotiations have continued since the Senate returned, but Democrats and Republicans remain divided over provisions covering lawmakers’ ethics and safeguards against bad actors. A vote on crypto market structure could take place as early as August.