In Clarity Act's final weeks, its path through U.S. Senate not getting much clearer

The weeks are growing short for the Digital Asset Market Clarity Act to thread the needle of the U.S. Senate, but talks continue in several distinct negotiations as lawmakers seek to patch the remaining rifts in the crypto industry's most important policy effort.

The toughest of the negotiations involves the Clarity Act provision to limit senior government officials from maintaining business ties with the industry, as is most prominently illustrated by President Donald Trump's own interests. Industry insiders have largely been watching from the sidelines as Senate Democrats including Ruben Gallego and Kirsten Gillibrand conduct close, three-party talks with Republican counterparts and the White House.

While the Democrats have rebuffed some ideas, they've immediately returned to the table, according to a person briefed on the talks. But no details have yet emerged about what the government officials' limitations might look like, apart from earlier suggestions from White House adviser Patrick Witt, who said the intent of his office was to ensure the restrictions affected a wide swath of government officials and didn't target the president directly.

Were the restrictions to affect Trump, it's also unclear how easily the president could extract himself from a complex web of crypto involvement, including digital-asset elements of his stake in World Liberty Financial, the crypto ties of other businesses such as Truth Social and his namesake memecoin.

Even if the ethics provision is worked out, there are three other distinct negotiations still weighing on the Clarity Act process: settling remaining concerns of Democrats from the Senate Agriculture Committee that oversees commodities; resolving the worries of the law enforcement community over the legal shield for decentralized finance (DeFi) developers; and the still-lingering dispute over stablecoin yield that U.S. bankers continue to press.

"The reason I'm optimistic is because every single senator and stakeholder that cares about this, including industry groups like the Digital Chamber, remain committed and remain at the table," said Cody Carbone, the CEO of the Digital Chamber, in a CoinDesk interview. "No one has given up."

Carbone's group is hosting a Tuesday fly-in event in which about 50 of its members from crypto firms including Hyperliquid, Elliptic and Anchorage Digital will head to as many as 30 lawmakers' offices to make the case for the Clarity Act. They're especially targeting senators who are outside of the negotiations, in the hopes of getting more of a rise of interest and support for a floor vote.

Crypto lobbyists had ridden some momentum when the Clarity Act managed to finally clear the Senate Banking Committee several weeks ago, but they're now eager to get another negotiation breakthrough to give the process a boost. The goal for many is that the bill hits the Senate floor the week of July 13 (leaving about 13 working days, plus weekends, to finish negotiations and revise the bill into its final form.)

One crypto insider suggested that the Agriculture committee Democrats could possibly be satisfied if the bill ensured the entire five-member Commodity Futures Trading Commission would be filled, including its two vacant Democratic positions. But the law-enforcement discussion over DeFi may be stickier, because Senator Catherine Cortez Masto, the Nevada Democrat doing much of the negotiating over the DeFi section known as the Blockchain Regulatory Certainty Act (BRCA), has been said to steadily push back and demand more changes to developer liability protections, according to another person familiar with the talks.

For her part, one of the leading Republican negotiators, Senator Cynthia Lummis, has been maintaining a steady stream of pro-Clarity posts on social media site X, urging her colleagues to hurry up. "Software developers should not need an army of lawyers to know if their code is legal," she said in one over the weekend. "The Clarity Act ends that absurdity."

A recent White House meeting was spurred by law enforcement groups expressing worries about contending with the DeFi space. But it ended with mixed results after Republicans tried to make the case that the latest Clarity Act draft includes a number of beefed-up tools for government investigators.

"We're still in the thick of negotiations," Carbone said. "There are several issues that need to be resolved before this bill can go to the Senate floor. Ethics and law enforcement concerns over the BRCA are the top two issues."