U.S. cryptocurrency market structure legislation is about to reach a critical juncture. White House crypto adviser Patrick Witt said that Republican negotiators have accepted most of the demands put forward by Democratic representatives, with the related compromise reaching approximately 95%. He believes that if senators still oppose the Digital Asset Market Clarity Act, the reasons may stem more from political positions than from specific policy disagreements.
Witt said at a public event held in Washington recently that President Trump had made further concessions on government ethics provisions, which deserved “heartfelt thanks.” He said the relevant provisions were “historic and unprecedented” in significance and expressed optimism about the upcoming first-round Senate vote on the bill.
However, optimism does not mean that the bill is already close to final passage. Since Democrats still have significant objections to issues such as ethics provisions, DeFi regulation, and state attorneys general’s enforcement powers, there remains considerable uncertainty over whether the bill can cross the Senate’s 60-vote threshold.
Why Has the Clarity Act Become a Focus of Bipartisan Disputes?
The main objective of the Digital Asset Market Clarity Act is to further clarify the regulatory boundaries of the U.S. digital asset market and resolve the long-standing jurisdictional dispute between securities regulators and commodities regulators.
For the crypto industry, clear market structure rules may help trading platforms, project parties, and financial institutions determine which businesses fall within the scope of securities regulation and which should be regulated by the Commodity Futures Trading Commission. Industry supporters believe that once regulatory boundaries become clear, companies will find it easier to formulate long-term business plans, and institutional funds may also be more willing to enter the market.
However, Democratic lawmakers and some regulators worry that the bill could weaken the government’s constraints on conflicts of interest and potential corrupt practices while easing industry regulation. Particularly against the background of commercial connections between Trump himself, members of his administration, and crypto assets, government ethics provisions have become the core issue in the negotiations.
Trump Makes Further Concessions on Government Ethics Provisions
According to Witt, after meeting with relevant officials, Trump agreed to make further adjustments to the government ethics provisions in the bill. The new proposal may require the president and other federal officials to transfer some crypto asset investments into blind trusts and grant states certain powers to pursue ethics violations by the federal government.
Witt believes that the current text already constitutes one of “the strongest provisions in federal ethics law.” He also said that Trump’s side believes these provisions will not be politicized or “weaponized” against specific individuals.
However, Democratic staff members do not agree. Democratic staff of the Senate Banking Committee pointed out that the new version may grant Trump-appointed officials, especially the attorney general, excessive power, allowing them to terminate or restrict the enforcement of the ethics provisions.
In addition, Democrats believe that allowing states to take legal action against the attorney general is insufficient to resolve potential conflicts of interest involving individual federal officials. Whether state attorneys general can directly pursue accountability under these provisions against the president, vice president, members of Congress, and federal judges has also become a focus of debate.
DeFi and Stablecoin Yield Issues Remain Unresolved
In addition to government ethics provisions, decentralized finance (DeFi) is also a major point of disagreement in the bill negotiations.
The crypto industry is concerned that the bill’s wording regarding DeFi projects may leave excessive room for enforcement, causing developers, protocol operators, or related service providers to face the risk of criminal prosecution. Industry supporters hope that regulatory rules can distinguish between entities that genuinely control financial activities and developers who only provide open-source code, infrastructure, or technical services.
The banking industry, meanwhile, is primarily focused on the risk of deposit outflows that payment stablecoins may create.
A coalition formed by several banking industry associations said that if stablecoin balances could earn interest or similar returns, consumers and businesses might transfer some funds from traditional bank accounts to stablecoin products, thereby reducing the sources of funds available to banks for lending and credit expansion.
Banking groups also pointed out that the current bill text may leave room to circumvent restrictions, allowing stablecoin issuers to indirectly provide returns to holders through rewards, rebates, or other similar arrangements.
Witt described the banking industry’s concerns as “hypothetical and speculative concerns.” He believes that the relevant industry has already participated in lengthy bipartisan negotiations. If it still opposes the bill, it should clearly explain whether it opposes specific policies or holds a negative attitude toward the crypto industry itself.
Passage of the First Vote Does Not Mean the Bill Will Become Law
The first vote planned by the Senate is mainly intended to determine whether the bill can enter the formal consideration process. To overcome the Senate’s “limiting debate” threshold, the bill generally needs the support of at least 60 senators.
Even if the first vote reaches this threshold, the bill may still face multiple procedures, including amendments, another vote, and final passage. If the Senate ultimately approves it, the bill must also return to the House of Representatives for consideration.
At present, the House is not in a normal session and may not reconvene until after the November midterm elections. Therefore, subsequent consideration of the bill may be postponed until the post-election “lame-duck” session. Supporters worry that delays could cause the legislative process to stall again.
Tom Emmer, the House majority whip and a lawmaker who supports the crypto industry, said that the United States “cannot afford to lose another year.” In his view, even if the bill’s contents cannot satisfy everyone, Congress still needs to push the relevant legislation to completion.
Does the Bill’s Failure Mean U.S. Crypto Regulation Will Stall?
Witt said that even if the Clarity Act ultimately fails to pass, it does not mean that U.S. crypto regulatory work will stop. The Securities and Exchange Commission and the Commodity Futures Trading Commission may still continue advancing the digital asset regulatory framework through rulemaking, regulatory interpretations, and enforcement policies.
This means that the U.S. crypto industry may follow two different paths in the future: on the one hand, Congress may pass a market structure bill to provide the industry with a more stable and systematic legal foundation; on the other hand, if legislation fails, regulators may still gradually establish regulatory boundaries through administrative rules and case-by-case enforcement.
The advantage of the former is that the rules are relatively complete and can reduce long-term uncertainty; the latter may bring problems such as faster regulatory changes and difficulties for companies in accurately determining compliance boundaries.
What Signals Should Be Watched Next?
Going forward, the market needs to focus on four aspects: first, whether the Senate’s first vote can reach 60 votes; second, whether Democrats will accept the latest ethics provisions; third, whether the responsibilities of DeFi developers and stablecoin yield restrictions will continue to be revised; and fourth, whether the House can promptly resume consideration after the midterm elections.
Overall, the disputes surrounding the Clarity Act have gone beyond simple cryptocurrency regulation and gradually involve the complex balance among government ethics, financial stability, bank deposits, and federal and state enforcement powers.
The “95% compromise” mentioned by Witt indicates that the two parties have indeed approached consensus on some policy issues, but the remaining 5% may precisely be the key to determining whether the bill can pass. For the crypto industry, what truly matters is not merely whether the bill receives first-round support, but whether the final text can clarify regulatory boundaries while avoiding new enforcement uncertainties and conflicts-of-interest risks.