Trump Family Crypto Business Derails Clarity Act in Senate Vote

Despite efforts to pass it through the Senate, the US Clarity Act has stalled due to controversy surrounding President Donald Trump's family crypto business. The bill aimed to provide regulatory clarity for the US crypto market by defining the legal classification of digital assets and dividing oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

However, a conflict-of-interest dispute emerged after it was revealed that Trump's family earned over $1.4 billion from crypto ventures last year, including more than $500 million from World Liberty Financial, a crypto firm in which they hold a controlling stake.

The Democrats demanded stronger safeguards to prevent conflicts of interest, but the Republicans tightened the relevant provisions ahead of the vote. The final version required public officials with a 'substantial financial interest' in a crypto business to divest that interest or place it in a blind trust.

Despite this, the Democrats argued that the bill's definition of a substantial interest was too vague and would not effectively prevent conflicts of interest. They also questioned whether the Justice Department could adequately check a sitting president's conflicts of interest, given that its leader, Todd Blanche, previously served as Trump's lawyer.

The Clarity Act's failure to advance to floor debate has dimmed prospects for passing it this year, with the congressional calendar already tight ahead of November's midterm elections. If legislation is delayed, the SEC and CFTC are expected to fill the regulatory gap through their own rulemaking, which could lead to a lack of regulatory predictability for banks, asset managers, and other institutions.