The CLARITY Act is approaching a key procedural vote in the US Senate on Tuesday after President Donald Trump agreed to most of a bipartisan proposal that would tighten ethics restrictions tied to public officials’ crypto interests, according to multiple reports.
That concession removed one obstacle. It did not settle the broader fight over the bill. A bipartisan coalition of state attorneys general is now pressing senators to vote no, arguing that the latest version would weaken state oversight of the crypto sector.
State attorneys general say the bill would limit state enforcement
A group of 18 state attorneys general, led by New York Attorney General Letitia James, sent a letter to Senate Banking Committee leaders saying the CLARITY Act would make it more difficult for states to pursue crypto companies accused of fraud or other misconduct.
The letter said: "While the current draft of the CLARITY Act reserves certain powers for states to prosecute fraud, the language is often ambiguous, unclear, or confined in ways that either create the opportunity to challenge state police powers or outright deprive the states of their ability to continue to combat the scam epidemic."
Their objections add another layer of difficulty for the legislation. The revised bill would give state attorneys general a role in enforcing new ethics restrictions, but the group said other sections would still erode their authority to police the crypto industry.
What the CLARITY Act would do
The CLARITY Act is considered a landmark piece of US crypto legislation. It would create a federal market structure for digital assets, clarify when crypto assets fall under securities law or commodities law, and define how oversight is divided between the Securities and Exchange Commission, or SEC, and the Commodity Futures Trading Commission, or CFTC.
Cointelegraph previously reported that Senate Majority Leader John Thune filed a cloture motion on the bill last month after lawmakers failed to move it forward before leaving Washington for their August recess. Tuesday’s procedural vote will determine whether the measure advances to Senate debate.
Trump backs tougher ethics restrictions
The pushback from state attorneys general came as lawmakers appeared to make progress on another major point of contention in the bill. The Associated Press reported on Sunday that Trump had agreed to "about 80%" of a proposal put forward by Republican Senator Thom Tillis and Democratic Senator Ruben Gallego, according to a senior GOP aide.
The legislation already barred federally elected officials, their spouses and federal judges from issuing digital assets. Under the latest compromise, the restrictions would go further. Officials with a "significant" financial interest in a crypto issuer would have to divest that interest or place it in a blind trust. State attorneys general would also receive a role in enforcing those restrictions.
Those changes address some of the concerns raised by Democrats and by Tillis, who had argued that earlier ethics provisions did not go far enough to deal with potential conflicts involving Trump’s crypto holdings and business interests.
Industry attention turns to Tuesday’s vote
Crypto in America, a publication co-hosted by Eleanor Terrett, said the weekend developments sparked a "renewed sense of optimism" across the digital asset industry. Republicans described the revised legislation as their "last, best and final offer" to Democrats ahead of Tuesday’s vote.
The crypto industry has pushed for the CLARITY Act because it would establish a federal market structure framework for digital assets and draw clearer lines between the regulatory roles of the SEC and the CFTC.