Clarity Act Stalls as White House Considers Counter-Proposal

The Clarity Act, a bipartisan bill aimed at regulating the cryptocurrency market in the US, is facing a critical juncture as the White House prepares to review it this weekend. The bill's future depends on the Trump administration's response to a new proposal drafted by Republican Senator Thom Tillis and Democratic Senator Ruben Gallego. This counter-proposal would authorize state attorneys general to prosecute federal officials if the Justice Department fails to enforce ethics and conflict-of-interest rules.

The previous draft of the Clarity Act supported by the White House had drawn criticism for leaving enforcement authority with the Justice Department and for restrictions that were set to expire in January 2029. The new proposal aims to address Democrats' concerns that enforcing ethics clauses directly through the Justice Department would not provide sufficient safeguards.

According to Eleanor Terrett, a cryptocurrency journalist, if the parties reach an agreement on the ethical provisions, the Senate vote on the Clarity Act could proceed. However, the bill needs the support of 60 senators to pass the procedural vote, and currently, the necessary support has not yet been secured.

The bill aims to define the limits of SEC and CFTC authority over crypto assets and create a comprehensive market structure for the sector. It also includes settlement provisions regarding stablecoin yields and some legal protections for software developers who do not offer custody services.