White House Weighs Bipartisan Crypto-Ethics Compromise for CLARITY Act

The White House is reviewing a bipartisan compromise on crypto-ethics rules for the CLARITY Act, which could determine whether the sweeping bill reaches a Senate vote before lawmakers leave for recess. The proposal was sent to the administration on Thursday morning and aims to break a monthslong deadlock over how to enforce restrictions on federal officials profiting from cryptocurrency.

The compromise, developed by Senators Thom Tillis (R-NC) and Ruben Gallego (D-AZ), targets the single biggest Democratic objection. It adds a role for state attorneys general to enforce the ban, rather than leaving it entirely to the U.S. Department of Justice. This change gives states standing to enforce restrictions against senior federal officials, addressing concerns that a rule enforced only by an attorney general appointed by Trump would be effectively unenforceable.

The stakes are high because the ethics fight is the last major obstacle to the Digital Asset Market CLARITY Act (H.R. 3633), which would divide regulatory jurisdiction over digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill has stalled in the full Senate almost entirely over the ethics question, with Democrats insisting on stronger conflict-of-interest rules.

The White House review of the compromise could determine the CLARITY Act's fate, with Senate vote prospects hinging on bipartisan support before August recess. A White House sign-off could prompt Senate Majority Leader Thune to initiate the cloture process, while rejection may delay passage until after the midterm elections.