White House backs ethics deal as CLARITY Act faces August deadline

The White House has agreed to a comprehensive ethics provision for the Digital Asset Market Clarity (CLARITY) Act, potentially clearing a major obstacle to the crypto regulation bill as lawmakers aim to advance it before the August recess.

White House agrees to ethics framework to advance CLARITY Act

The agreement follows weeks of negotiations over rules aimed at preventing government officials from having conflicts of interest in the crypto industry.

Crypto reporter Eleanor Terrett stated on Tuesday that lawmakers are also negotiating provisions related to decentralized finance (DeFi), but said the ethics language remains the primary hurdle to reaching an agreement.

Terrett shared that a spokesperson for Senator Cynthia Lummis said a recent conversation between the White House and the senator "went well." The spokesperson added that the ethics language, expected to be released in the coming days, would reflect the outcome of the discussions.

The proposed ethics framework would seek to limit the ability of the president, elected officials and senior government officials to personally profit from certain crypto-related ventures while in office. Crypto holdings and earnings linked to President Donald Trump and his family have drawn further attention to the debate over how the legislation should address potential self-dealing and conflicts of interest.

Senators remain divided over ethics enforcement

However, lawmakers remain divided over how the rules should be enforced. Terrett reported that Senator Angela Alsobrooks criticized a proposal that would give the Department of Justice (DOJ) primary responsibility for enforcing the ethics provisions.

"Sen. Alsobrooks tells me the White House's idea to have the Department of Justice enforce the Clarity Act's ethics provisions is an 'unserious offer,'" Terrett wrote, adding that the senator would not support the legislation if DOJ enforcement were the only option.

Democrats have pushed for stronger and more enforceable safeguards, including potential mechanisms that would allow state attorneys general to challenge or enforce ethics requirements. 

Senator Alsobrooks is one of two Democratic senators who previously voted to advance the bill out of committee. However, she has made strong ethics protections a condition of her continued support.

Senator Bernie Moreno has also been involved in negotiations with Lummis as lawmakers seek to reach an agreement that can secure enough bipartisan support for the legislation.

The White House's reported agreement marks a positive development in the effort to resolve the ethics dispute. With the Senate facing less than a month before the August recess, lawmakers have a limited window to finalize the ethics provisions and move the legislation toward a floor vote.

The White House is now urging the Senate to complete work on the bill before lawmakers leave for the recess. However, negotiations over the ethics framework and DeFi provisions remain ongoing, leaving the final timeline for Senate action uncertain.