A key cryptocurrency bill could flop because of Trump's crypto ventures and banks' objections

By Victor ReklaitisThe Clarity Act's progress in May helped lift the price of bitcoin, but now the measure is facing obstacles in the full SenatePresident Donald Trump recently disclosed that he earned $1.4 billion in crypto ventures in 2025, raising ethics concerns that could help doom the Clarity Act.Bitcoin reached a roughly six-month high above $80,000 in the first half of May, with some help coming from a vote by the Senate Banking Committee to advance the Clarity Act, a bill aiming to establish a clearer regulatory framework for cryptocurrencies.The original crypto (BTCUSD) is now trading around the $64,000 mark, with the full Senate not doing all that much to provide a lift. The chamber could be on track to fall short of passing the Clarity Act before senators begin a five-week break."Negotiations will continue, but hope is diminishing quickly. The Senate could still hold a vote on Clarity before recess, and that might happen. But right now it doesn't have the votes to pass. Probably not even very close. A vote would be mainly to put senators on the record, which could put pressure on Democrats who fear the crypto lobby's campaign influence," Ian Katz, an analyst at Capital Alpha Partners, said in a note.Jaret Seiberg, an analyst and managing director at TD Cowen's Washington Research Group, also has been downbeat on the prospects for the legislation, which the crypto industry has been clamoring for. He said in a note that "the best opportunity for the Clarity Act to become law is for the Senate to pass it with Democratic support prior to the August recess," but he gives only around a one-in-three chance of that happening.On the prediction market Kalshi, bettors appear a bit more optimistic than that, recently giving a 51% chance for a vote on the Clarity Act in the Republican-run Senate before the August recess, which is due to start Aug. 7 and run until Sept. 14. However, holding a vote isn't the same as actually passing the legislation with the 60 votes in favor that are required in the Senate, which has a 53-47 split of Republicans to Democrats and independents.Crypto-industry players aren't throwing in the towel. Kristin Smith, president of the Solana Policy Institute - an advocacy group that has been lobbying for the Clarity Act - said in social-media posts on Tuesday that the bill's supporters are "closer to getting Clarity across the finish line than we have ever been." She also said, "Very few issues remain."One big sticking point for the Clarity Act is Democratic objections to how the measure's ethics provisions address President Donald Trump's lucrative crypto ventures. His $1.4 billion in earnings last year from such ventures has been drawing considerable attention ever since those earnings were detailed a month ago in his annual financial disclosure.The bill's latest text "does nothing to prevent him from vacuuming up his next $1.4 billion in crypto profits," Democratic Sen. Elizabeth Warren of Massachusetts said in a news release last week. "Even if it did, the president can, and will, simply ignore the law because he handpicked his personal lawyer to lead the Department of Justice that is charged with enforcement."Presidents have been exempt from conflict-of-interest rules that prohibit federal officials from having a role in government matters in which they have a financial stake, but Trump's earnings while in office are unprecedented. His predecessors relied on blind trusts, divestments or investments in diversified mutual funds and Treasury bills to limit ethics concerns.Seven other Democratic senators released a joint statement last week that noted their concerns over ethics, along with other issues. "The Republican-proposed text of the Clarity Act as it currently stands falls short. Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened," said the statement from the senators, among them Virginia's Mark Warner and Arizona's Ruben Gallego.The office of Republican Sen. Cynthia Lummis of Wyoming has defended the Clarity Act's ethics provisions and the concessions made by the Trump White House. "No president in American history has voluntarily agreed to self-imposed, substantive ethics limits like President Trump has," the office said in a release, adding that the bill "bans all federal officials, including the president of the United States, from issuing or sponsoring a digital asset for consideration, backed by real enforcement and real penalties." Lummis has been a top supporter of the crypto legislation.Another sticking point is language in the bill that lets crypto companies offer interest-like payments to holders of stablecoins, which are a type of cryptocurrency that pegs its value to the dollar DXY or other government-backed currencies. Banks have big concerns about that, and both Democratic and Republican senators have indicated that they're sympathetic to these worries.A joint statement from several lobbying groups for banks said last week that the latest version of the Clarity Act "still puts at risk the local lending that drives economic activity in the U.S." The statement said the lobbying groups continue to push for "targeted changes that would strengthen the prohibition on interest-like payments for holding stablecoins, which will siphon away the bank deposits that fuel small business, mortgage and farm loans in communities across the country."The Senate could pass the Clarity Act after its August recess, but analysts see that as unlikely, because lawmakers will then be dealing with other matters, such as preventing another government shutdown and trying to win their midterm elections. A version of the measure easily passed the Republican-run U.S. House of Representatives last year."We are asked often what happens if the Senate does not pass Clarity before the August recess? To us, the bill could still pass in the fall, though prospects would be below 20%, as it would have to compete with the election and must-pass bills," TD Cowen's Seiberg said."If Clarity takes an August recess, it could be reconsidered in September. But we think its chances would decline meaningfully," Capital Alpha's Katz said. "We've been at 40% odds of passage this year. That's trending downward, and we will likely reduce our odds to 25%-30% if the Senate recesses Aug. 7 without passing Clarity."On the prediction market Polymarket, bettors recently were giving just a 27% chance that the Clarity Act will become law this year.-Victor ReklaitisThis content was created by MarketWatch, which is operated by Dow Jones & Co. 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