White House Accepts Ethics Language as "Clarity Act" Nears Possible Senate Vote Ahead of August Recess

Industry sources say the Trump administration has agreed to add an ethics provision to the "Clarity Act" (Digital Asset Market Structure Act), and the draft language has been shared with several Republican senators. The text has not been publicly released, but participants expect updated bill language in the coming days, clearing the way for a Senate vote. Talks on the Clarity Act have moved slowly over the past year. Earlier disputes over stablecoin yield rules and DeFi oversight have largely narrowed. The remaining sticking point has been how to address potential conflicts of interest involving U.S. officials and the crypto industry. The White House's willingness to accept ethics language is viewed as a step toward resolving that final obstacle. Separately, Patrick Witt, executive director of the White House Digital Assets Advisory Council and a key figure driving the legislation, said he will stay in his post through the bill's final push. Reports had suggested Witt could step away ahead of a pivotal Senate phase due to U.S. Army National Guard training. He has now confirmed that those duties were postponed. What the "Clarity Act" would do Formally titled the Digital Asset Market Clarity Act of 2025, the bill is a centerpiece of the Trump administration's effort to position the U.S. as a "global crypto hub." It seeks to create a unified federal framework for digital assets by clarifying the legal status of different tokens and drawing a sharper line between the responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The proposal would establish categories including digital commodities, investment contract assets, and permitted payment stablecoins. Digital commodities tied to functional blockchain networks would fall primarily under the CFTC. Investment contract assets involving fundraising issuances would remain under SEC oversight. Stablecoin issuers would be regulated mainly by banking authorities. Supporters argue the framework would end years of SEC-CFTC turf battles that have left exchanges, issuers, and developers operating under regulatory uncertainty. In prior years, the SEC under former Chair Gary Gensler leaned heavily on the Howey test and enforcement actions to classify a broad set of digital assets as securities, while the CFTC maintained that certain highly decentralized assets are more commodity-like. If enacted, the Clarity Act would represent the first comprehensive U.S. market-structure regime for crypto. Near-term effects could include improved sentiment on policy expectations. Longer term, advocates say it would reduce regulatory risk and provide a clearer basis for traditional financial institutions and long-horizon capital to enter the sector. The last major dispute: ethics The bill cleared the U.S. House of Representatives on July 17 last year by 294-134, well above a simple majority. Its Senate path has been more complex than the GENIUS Act, which advanced more smoothly and was ultimately signed by Trump. While Republicans hold a Senate majority, a sweeping market-structure bill is widely seen as requiring some bipartisan backing, making negotiations more politically sensitive. Over the past year, debates centered on three areas: stablecoin yield rules, the scope of DeFi regulation, and potential conflicts of interest between the administration and the crypto industry. Negotiators have since converged on the first two. On stablecoin yields, a compromise described by industry participants would "prohibit rewards solely for holding stablecoins, while permitting incentives based on actual activities." That left ethics provisions as the key unresolved issue. Negotiators have discussed restrictions designed to prevent the president, vice president, members of Congress, and other federal officials from profiting from digital assets while in office. The White House's reported acceptance of an ethics clause is being read as a breakthrough in the final standoff. A tight legislative clock Timing may be even more pressing than policy differences. Congress typically begins its summer recess in mid-August, leaving roughly a dozen working days to finalize text and move the bill through the Senate. Kristin Smith, CEO of the Blockchain Association, which has been a leading lobbying force around the bill, said yesterday that "now is the most critical moment." She said the current version includes stronger illicit-finance provisions, enhanced consumer protections, and tighter requirements for spot trading platforms, calling it among the most comprehensive digital asset market-structure frameworks she has seen. If negotiators settle ethics-related language in the coming weeks, the bill could break through before lawmakers leave Washington. If talks stall again, the framework's next chance could depend on a new political opening. Still not final, but nearing an inflection point Even with the White House's green light on ethics language, key uncertainties remain, including when the final text will be released, how the Senate review will unfold, and whether bipartisan coordination holds. Yet current signals suggest the yearlong effort is approaching an end. If the Clarity Act advances before the August 10 recess, it could mark a pivotal moment for U.S. crypto regulation and potentially influence global policy approaches. The industry's challenge in recent years has been less about demand than the lack of a stable, predictable rulebook. The bill's backers say legislating clearer definitions and responsibilities could provide exchanges with a more straightforward registration path, give developers a more predictable environment, and offer traditional finance a firmer compliance foundation for entering digital assets. Recommended reading: Clarity Act countdown: 25 days left—what happens to the crypto market if it fails to pass before the August recess?