Trump ethics fight sinks CLARITY Act in dramatic Senate defeat

The CLARITY Act stalled in the Senate after a final round of bipartisan negotiations broke down and several Democrats who helped shape the bill refused to advance it.

The measure failed to secure the 60 votes needed to invoke cloture on the motion to proceed with H.R. 3633, preventing the most consequential US crypto market-structure proposal from reaching the Senate floor.

While the vote did not decide the bill’s final passage, falling short leaves the legislation off the floor and forces its sponsors to decide whether another round of negotiations is possible.

The outcome was particularly damaging because Democrats who had spent months working on the legislation opposed it. Sens. Kirsten Gillibrand, Mark Warner, Cory Booker, Raphael Warnock, Ruben Gallego, Angela Alsobrooks and Catherine Cortez Masto all voted against moving forward.

Their defections followed an unsuccessful attempt to close remaining differences over ethics rules shortly before the vote.

Senate staff had reportedly met in the Capitol hideaway office of Sen. Thom Tillis to discuss possible final changes to restrictions governing crypto interests held by public officials. Staff working for Senate Banking Committee Chairman Tim Scott later ended the talks without an agreement.

That left Republicans heading into the vote without the Democratic coalition they had spent months trying to assemble.

The setback came despite a major rewrite released over the weekend. Republicans said the 635-page final text incorporated 126 substantive changes Democrats sought, while President Donald Trump agreed to tougher restrictions on crypto-related financial interests held by senior officials.

However, those concessions were still not enough.

Ethics fight breaks the CLARITY Act negotiating coalition

The ethics package emerged as one of the decisive fault lines in the final hours before the vote.

Sen. Elissa Slotkin said she opposed the bill because its restrictions on crypto interests held by Trump, his family and administration officials remained too weak.

Slotkin aadded:

“The ethics provisions in this bill are simply too thin.”

She argued that Congress should impose rules strong enough to prevent any future administration, Democratic or Republican, from using public office to benefit from crypto ventures.

Slotkin also raised national-security concerns, saying lawmakers had more work to do on money laundering and financing channels linked to terrorist groups, North Korea and Iran.

She questioned whether agencies tasked with carrying out the new framework, including the Commodity Futures Trading Commission, had enough staffing and oversight capacity to enforce it effectively.

Her opposition was not a rejection of market-structure legislation altogether. Slotkin said the bill contained bipartisan provisions that could serve as the basis for another attempt and said she remained open to future negotiations.

Sen. Bernie Sanders took a broader approach, tying the legislation to the crypto industry’s political spending and Trump’s financial interests.

Sanders said crypto billionaires had spent nearly $300 million on the midterm elections while Trump and his family had collected more than $1.4 billion from crypto-related ventures.

He accused the industry of seeking favorable treatment from Congress and urged senators to reject the legislation.

The failed vote leaves Republicans with a difficult choice. Reviving the CLARITY Act would likely require reopening provisions they had already presented as their final compromise, particularly the ethics rules that failed to retain some of the Democrats most closely involved in drafting the bill.