Trump’s deal on crypto regulations fails to win over Democrats on the CLARITY Act
Senate Republicans added crypto restrictions for top elected officials to the CLARITY Act, but Democratic opposition pushed its 2026 passage down 15 percent from the July 21 peak.
Summary
- Senate Republicans have added crypto ethics rules, but Democrats still oppose the CLARITY Act’s enforcement plan.
- The odds of passing Polymarket fell by 15 points as bipartisan talks stalled.
- Coinbase shares fell 4% as investors assessed the Senate’s uncertain path to the bill.
According to reports, Democratic Senator Angela Alsobrooks opposed relying solely on the Justice Department to enforce ethics rules, calling the proposal “absurd.” He indicated that he would not support the CLARITY Act if the DOJ remained the only enforcement option.
Alsobrooks said he would vote against the bill if the current language reaches the Senate floor. His position is important because he was one of only two Democrats who helped push the legislation through the Senate Banking Committee in May.
President Donald Trump accepted the ethics provision earlier this week after Democratic lawmakers made restrictions on interactions with elected officials a condition for continuing negotiations. Although his concession addressed one contentious issue, infighting has kept a bipartisan agreement out of reach.
According to reports from Crypto in America reporter Eleanor Terrett and Punchbowl News reporter Brendan Pedersen, the White House sent the proposed language to Republican senators on July 20. Democrats did not revise the wording before Trump’s deal became public.
Democratic resistance reduces the chances of the bill’s passage
Under the latest draft, the president, vice president, members of Congress, federal judges and their spouses would qualify as elected officials. The law will prevent them from issuing or subsidizing digital assets while remaining subject to restrictions.
Covered officials will also have to sell their crypto assets, privatize them or use both methods. According to the reported bill text, the provision will expire at noon on Jan. 20, 2029, when Trump is scheduled to leave office.
Another clause would allow the company to continue using the officer’s name, image or likeness if the plan was in place before the person entered the covered situation. The proposed restrictions do not appear to apply equally to all members of an officer’s extended family.
Democrats had sought ethics language after financial disclosures showed Trump received up to $1.4 billion from crypto-related businesses last year. Speakers Alsobrooks and Kirsten Gillibrand told their colleagues in early July that market structure legislation would not advance without laws that address potential conflicts of interest among elected officials.
Trump’s approval initially encouraged traders to bid on a better chance of passage. The polymarket’s odds of the CLARITY Act becoming law in 2026 rose to about 43% on July 21, compared to 32% last Friday.
Those gains faded after Democrats challenged the enforcement mechanism. The contract fell to 39% and later traded near 35%, according to Polymarket, restoring the optimism created by Trump’s approval.
Coinbase shares followed a weak legal opinion, falling about 4% to around $169 on July 22. The stock had closed at $175.85 one day earlier before trading between $166 and $175 during the next session.
The price drop came as investors scrutinize legislation that could dictate how US exchanges, token issuers and stablecoin businesses operate. According to US crypto policy tracker Latham & Watkins, the Senate bill still needs to clear the 60-vote threshold, merge with the version approved by the House and get Trump’s signature.
Republicans hold 53 Senate seats, meaning the party needs at least seven Democrats if all Republicans support the measure. Alsobrooks’ organized opposition leaves sponsors without a clear path to the majority needed to move the legislation forward.
Enforcement disputes keep crypto law from being fixed
Beyond the ethics section, Republicans added language intended to address concerns raised by prosecutors and law enforcement groups. Those groups had warned that parts of the Blockchain Regulatory Certainty Act could limit their ability to pursue illicit funds involving decentralized crypto services.
Senate Banking Committee Democrats raised similar national security concerns in May. They warned that this bill should not create exclusions that would avoid punishment, criminal groups or foreign enemies.
Republican committee members argued that the law already contains anti-money laundering requirements and information-sharing measures for digital asset companies. The revised document now gives law enforcement more authority to deal with crypto-related crimes, although the provision did not resolve separate disagreements over the use of the code.
Questions about regulatory resources have reached the Futures Trading Commission. During a House Agriculture subcommittee hearing, former CFTC attorney Carl Kennedy warned that the regulator may be “short-staffed” as it oversees the fast-growing speculation markets and prepares for new digital asset operations that could come under the CLARITY Act.
Kennedy’s written testimony indicated that trading volume in CFTC-registered futures markets exceeded $25 billion by 2025. In one major segment, the average daily event contract listing increased from approximately 1,600 in April 2025 to approximately 162,000 in April 2026.
Although Republicans have revised the bill to address ethics and law enforcement concerns, Alsobrooks’ response shows that the way to hold officials accountable has not been resolved. Polymarket’s uneven fall and weak Coinbase shares suggest that traders did not treat Trump’s approval as a done deal for bipartisanship.
