Trump’s crypto ethics deal fails to win Democrats on CLARITY Act

Senate Republicans have added crypto restrictions for top elected officials to the CLARITY Act, but Democratic resistance has pushed its 2026 passage odds down 15 percentage points from their July 21 peak.

According to reports, Democratic Senator Angela Alsobrooks opposed relying solely on the Department of Justice to enforce the ethics rules, calling the proposal “unserious.” She indicated that she would not support the CLARITY Act if the DOJ remained the only enforcement option.

Alsobrooks said she would vote against the bill if the current language reached the Senate floor. Her position matters because she was one of only two Democrats who helped advance the legislation through the Senate Banking Committee in May.

President Donald Trump accepted the ethics provision earlier this week after Democratic lawmakers made restrictions on elected officials’ crypto dealings a condition for further negotiations. Although his concession addressed one disputed issue, the enforcement fight has kept a bipartisan agreement out of reach.

According to reports from Crypto in America journalist Eleanor Terrett and Punchbowl News reporter Brendan Pedersen, the White House sent the proposed language to Republican senators on July 20. Democrats had not reviewed the wording before Trump’s agreement became public.

Democratic resistance cuts the bill’s passage odds

Under the latest draft, the president, vice president, members of Congress, federal judges and their spouses would qualify as covered elected officials. The legislation would prohibit them from issuing or sponsoring digital assets while they remain subject to the restrictions.

Covered officials would also have to sell their crypto holdings, place them in a blind trust or use both methods. According to the reported bill text, the provision would expire at noon on Jan. 20, 2029, when Trump is scheduled to leave office.

Another clause would allow a company to continue using an official’s name, image or likeness if the arrangement existed before the person entered covered status. The proposed restrictions do not appear to apply equally to every member of an official’s extended family.

Democrats had demanded ethics language after financial disclosures showed that Trump earned as much as $1.4 billion from crypto-related ventures last year. Senators Alsobrooks and Kirsten Gillibrand told colleagues earlier in July that the market structure legislation could not advance without rules addressing elected officials’ potential conflicts.

Trump’s approval initially encouraged traders to price in a better chance of passage. Polymarket odds for the CLARITY Act becoming law in 2026 climbed to about 43% on July 21, compared with 32% the previous Friday.

Those gains faded after Democrats challenged the enforcement mechanism. The contract fell to 39% and later traded near 35%, according to Polymarket, reversing the optimism created by Trump’s concession.

Coinbase shares followed the weaker legislative outlook, falling about 4% to nearly $169 on July 22. The stock had closed at $175.85 one day earlier before trading between roughly $166 and $175 during the next session.

The price decline came as investors assessed legislation that could determine how U.S. exchanges, token issuers and stablecoin businesses operate. According to Latham & Watkins’ U.S. crypto policy tracker, the Senate bill must still clear a 60-vote threshold, be reconciled with the House-approved version and receive Trump’s signature.

Republicans hold 53 Senate seats, meaning the party needs at least seven Democrats if every Republican supports the measure. Alsobrooks’ planned opposition leaves sponsors without a clear path to the supermajority required to move the legislation forward.

Enforcement disputes keep crypto regulation unsettled

Beyond the ethics section, Republicans added language intended to answer concerns raised by prosecutors and law enforcement groups. Those groups had warned that parts of the Blockchain Regulatory Certainty Act could limit their ability to pursue illicit finance involving decentralized crypto services.

Senate Banking Committee Democrats raised similar national-security concerns in May. They warned that the bill should not create exclusions that sanctions evaders, criminal groups or foreign adversaries could exploit.

Republican committee members have argued that the legislation already contains anti-money-laundering requirements and information-sharing measures for digital-asset companies. The updated text now gives law enforcement more authority to address crypto-related crime, although the provision has not resolved the separate disagreement over ethics enforcement.

Questions about regulatory resources have also reached the Commodity Futures Trading Commission. During a July 21 House Agriculture subcommittee hearing, former CFTC lawyer Carl Kennedy warned that the regulator may be “short-staffed” as it oversees fast-growing prediction markets and prepares for possible new digital-asset duties under the CLARITY Act.

Kennedy’s written testimony showed that trading volume on CFTC-registered prediction markets exceeded $25 billion in 2025. On one major platform, average daily event-contract listings increased from about 1,600 in April 2025 to nearly 162,000 in April 2026.

Although Republicans have revised the bill to address ethics and law-enforcement concerns, Alsobrooks’ response shows that the method of holding officials accountable remains unresolved. Falling Polymarket odds and weaker Coinbase shares suggest traders have not treated Trump’s concession as a completed bipartisan agreement.