WASHINGTON, D.C. — The White House is pushing back after Senate Democrats signaled they would not support a revised version of Republicans’ landmark cryptocurrency regulation bill, saying a new ethics provision approved by President Donald Trump does not go far enough to limit the president’s ability to profit off crypto.
The CLARITY Act is the nation’s most important crypto legislation, aiming to regulate an industry currently worth $2.3 trillion. After passing the House last July, the bill has stalled in the Senate for several reasons, including Democrats’ concerns over Trump’s highly lucrative involvement in the crypto industry.
Trump made at least $1.4 billion in various crypto-related ventures last year, according to new financial disclosure reports.
After meeting with Republican senators last week, including Sen. Bernie Moreno, R-Ohio, Trump agreed this week to an ethics provision in the bill. The provision would bar public officials, including the president and his spouse, from issuing or sponsoring crypto for profit.
“It completely bans the issuance, sponsorship or promotion of digital assets. It has civil penalties enforced by the U.S. Attorney General. And if you’re currently somebody who owns a digital asset company or control of a digital asset company, you have a choice of putting it into a blind trust where you have no control, no direction, or divesting,” Moreno said in an interview with Spectrum News.
However, the ethics provision would only block federal officials from issuing new crypto assets. It would not block the president from profiting off his or his family’s existing crypto holdings, and it would expire the day Trump leaves office.
“[Trump] gets much of his money from transactions or from licensing, and that is not covered by this bill, so people can continue to work in on these companies and trade on these assets and produce income that would come to him,” said Chris Swartz, senior counsel at Democracy Defenders Fund. “To me, this really looks like a caricature of ethics reform. It really looks like one step forward when it’s two steps back.”
Democrats want to give state attorneys general the power to enforce the ethics language, claiming that a politically appointed Attorney General who reports to the president cannot independently or reliably prosecute ethics violations committed by the president.
Moreno and other Republicans want to give the Justice Department enforcement powers.
“They want state attorneys general to enforce this. That’s terrible public policy. This would create an absolute rush to having 50 rogue state attorney generals trying to make a name for themselves, suing federal officials. It makes no sense,” Moreno said. “My point of view to the Democrats is the ethics provision is a tiny part of the bill. If they have a different point of view, let the bill go on the floor and offer an amendment.”
A group of seven Senate Democrats, open to the bill and therefore critical to passing it, released a statement that the current version “falls short.”
The White House wrote in a statement,
“If Senate Democrats block this historic legislation after the administration has bent over backward to accommodate their concerns… it is the Democrats who are blocking this legislation because they were never serious about a legislative outcome.”
Moreno said the bill still has a path forward.
“Look, this is the strongest ethics provision in history, and we’ve never passed ethics laws this tight,” he said.
The ethics provision comes at a crucial moment for the legislation. If the Senate fails to pass the bill next week, when lawmakers head home for the August recess, it is unlikely to become law before the midterm elections in November.