President Donald Trump has signed off on new ethics language that would bar top federal officials from creating, issuing or profiting from cryptocurrencies while in office, according to people familiar with the negotiations, clearing a major obstacle for the proposed Clarity Act as lawmakers try to bring the digital asset bill to a Senate vote.
The provision, described by three people familiar with the talks, would apply to members of Congress, the president, the vice president and other federal officials. It is designed to prevent officeholders from using public power to benefit personally from digital asset ventures, including tokens they create, promote or control.
In a notable change from earlier drafts, enforcement would be handled by the U.S. Department of Justice rather than state attorneys general. Two people familiar with the discussions said that shift was central to the final negotiations and remains a point of concern for some Democrats who wanted state-level officials to retain a role in policing potential misconduct.
The ethics agreement removes what had become the main political barrier to advancing the broader market-structure bill, which seeks to divide oversight of digital assets between federal regulators. Under the proposal, the Commodity Futures Trading Commission would receive authority over certain digital commodities, while the Securities and Exchange Commission would continue to oversee tokens that qualify as securities.
The White House did not confirm the exact text of the ethics language but said discussions with lawmakers were continuing as the administration works to move the bill forward. Officials said they expect Senate leaders to bring the legislation to a vote after months of debate over conflicts of interest, enforcement power and the treatment of tokens linked to public officials.
The breakthrough follows intense scrutiny of Trump’s own digital asset interests, including income tied to World Liberty Financial. Recent financial disclosures have shown millions of dollars in crypto-related income connected to the president, fueling Democratic criticism that any crypto legislation must include strict limits on personal enrichment by elected officials.
Ethics fight moves to the center
The Clarity Act had been promoted by supporters as a way to replace case-by-case enforcement with clearer rules for the digital asset industry. But the debate shifted sharply as lawmakers questioned whether public officials with direct or indirect crypto ties could benefit from legislation that creates a friendlier regulatory structure for digital assets.
Senator Angela Alsobrooks, a Maryland Democrat and one of the lead negotiators on the bill, raised concerns earlier Tuesday about giving enforcement authority to the Justice Department instead of state attorneys general. Her concern centered on whether federal prosecutors would be sufficiently independent in cases involving the president, senior administration officials or members of Congress.
The enforcement issue became one of the final unresolved questions in the negotiations. Earlier versions of the ethics language would have allowed state attorneys general to bring cases, a structure favored by lawmakers who argued that state-level enforcement could provide an additional check if federal authorities failed to act.
Supporters of the Justice Department approach argued that a single federal enforcement channel would avoid a patchwork of state actions and provide more consistent treatment for officials covered by the rule. Critics countered that the Justice Department sits within the executive branch, raising questions about whether it would aggressively pursue cases involving a sitting president or senior federal officials.
Trump accepted the ethics terms on Monday after discussions with lawmakers focused on preventing conflicts of interest. People familiar with the talks said the agreement was intended to draw a bright line between public service and private financial activity in digital assets.
What the rule would prohibit
The proposed language would bar covered federal officials from issuing digital assets while serving in office. It would also prohibit them from profiting from such assets, a restriction that could apply to tokens launched by officials, tokens connected to their businesses or other crypto products from which they receive compensation.
The exact wording has not yet been made public, and key details remain unclear. Lawmakers have not released the full scope of the personal trading limits, the treatment of assets held before taking office, or whether family members and affiliated businesses would be covered. Those details could determine how strict the rule becomes in practice.
The measure is expected to apply to the president, vice president, members of Congress and other senior federal officials. It is not yet clear how far the definition of “other federal officials” would extend or whether it would include agency heads, senior staff, political appointees or regulators with direct authority over digital assets.
The ethics language comes after months of talks over how to manage officeholders’ personal financial exposure to crypto. Lawmakers from both parties have acknowledged that digital assets present an unusual ethics challenge because tokens can be launched quickly, promoted online and traded globally with limited transparency.
Political meme tokens have added to those concerns. Tokens tied to public figures can rise or crash based on statements, campaign events or rumors, creating the possibility that political attention itself becomes a source of private financial gain. Lawmakers involved in the Clarity Act negotiations have sought to prevent officials from benefiting from that dynamic while still allowing broader market rules to advance.
Warren raises disclosure concerns
Senator Elizabeth Warren has pointed to recent financial forms showing $1.4 billion in total digital income tied to the Oval Office, according to the figures cited by critics of the administration’s crypto activities. Warren and other Democrats have argued that the scale of digital asset income connected to Trump makes strong ethics rules essential before Congress considers a broad regulatory bill.
The White House has not confirmed the figures cited by Warren. Administration officials have instead emphasized that the president is working with lawmakers and supports a framework that gives digital asset firms clearer rules.
For Democrats skeptical of the bill, the ethics language is only one part of the debate. They have also questioned whether the legislation could weaken the SEC’s ability to police fraud, reduce protections for retail traders or allow token issuers to avoid stricter securities rules.
Republican supporters have argued that the current system is unclear and has left legitimate firms operating under legal uncertainty. Senator Cynthia Lummis, a major supporter of digital asset legislation, helped draft the underlying token trading framework. She has said the goal is to prevent the government from regulating the industry primarily through surprise lawsuits and enforcement actions after the fact.
That argument has resonated with some lawmakers who say Congress, not regulators alone, should decide how digital assets are classified and supervised. The Clarity Act attempts to do that by dividing authority between the CFTC and SEC based on how a token functions and how it is sold.
How the bill would divide oversight
At the center of the Clarity Act is a proposed regulatory split between digital commodities and securities. The CFTC would be given authority over certain digital goods, including tokens that meet the bill’s criteria for commodity-like treatment. The SEC would retain jurisdiction over tokens that are sold as investment contracts or otherwise qualify as securities under federal law.
Supporters say that division would give crypto businesses a clearer path to compliance and reduce confusion about which regulator has authority. They argue that many tokens do not fit neatly within existing securities law and that Congress must create a tailored framework for blockchain-based markets.
Opponents say the split could weaken oversight if token issuers are able to structure products to avoid SEC rules. They also worry that giving the CFTC a larger role could strain an agency that has historically overseen derivatives markets rather than the full range of spot digital asset trading.
The bill’s supporters counter that the CFTC would receive new authority and resources to regulate digital commodity markets. They say the SEC would still police securities offerings, fraud and other misconduct within its jurisdiction.
The ethics language is meant to sit alongside that market structure, not replace it. But politically, it has become inseparable from the bill. Without a credible conflict-of-interest rule, several lawmakers were reluctant to support legislation that could affect assets linked to sitting officials.
Bitcoin rises as traders react
Bitcoin moved above $66,000 early Tuesday as traders responded to the unexpected ethics agreement and the possibility that the Clarity Act could advance. The price move reflected renewed expectations that Congress may be closer to passing long-awaited digital asset rules, though the bill’s chances remain uncertain.
Prediction market Polymarket gave the legislation a 48 percent chance of becoming law this calendar year, underscoring the difficulty of moving a complex market bill through Congress even after the ethics dispute appeared to ease. The measure would still need to survive Senate procedure, secure enough votes and avoid being derailed by opposition from both consumer advocates and banking groups.
Digital asset markets are likely to remain volatile while lawmakers negotiate the final text. Traders are watching for the exact wording of the ethics limits, the scope of CFTC authority and any changes to SEC oversight. Political meme tokens may be especially sensitive to the outcome because their value can depend heavily on political attention and sentiment.
The bill would need 60 votes to clear key Senate hurdles. That threshold remains a major challenge, especially if Democrats remain divided over enforcement and if Republicans face pressure from banks or conservative skeptics of new federal market rules.
Banking groups add pressure
Community banks and local lenders have warned that the legislation could drain as much as $1.3 trillion in deposits from the traditional banking system, a figure cited by opponents who argue that clearer crypto rules could accelerate movement of money into digital asset products. That concern has added pressure from outside lobbying groups seeking to slow or defeat the bill.
Banking groups have long argued that digital asset firms should be subject to strong safeguards if they offer products that resemble payments, deposits or money-market instruments. They say looser rules could create risks for consumers, smaller banks and financial stability.
Supporters of the Clarity Act reject the idea that the bill would create an unchecked alternative banking system. They say the legislation is focused on market structure, token classification and trading oversight, not on allowing crypto firms to operate without supervision.
Still, the banking opposition matters. Community lenders have political influence in both parties, especially among senators from rural states and smaller markets. Their warnings could complicate the path to 60 votes even if the ethics language satisfies enough lawmakers to move the bill forward.
Next steps remain uncertain
The next major test will be whether Senate leaders bring the bill to the floor before lawmakers leave for the August recess. If the chamber does not vote before the break, supporters may have little time left to pass the measure this year, especially as election-year politics intensify.
The full text of the ethics language is expected to be closely examined once released. Lawmakers, watchdog groups and market participants will look for how the rule defines profit, whether indirect holdings are covered, how violations would be investigated and whether penalties are strong enough to deter misconduct.
For now, the agreement gives the Clarity Act new momentum but does not guarantee passage. The bill still faces questions over enforcement, regulatory authority, banking-system risk and the personal financial activities of public officials.
The ethics deal may have removed the largest visible hurdle, but the final vote count remains uncertain. Traders now face a familiar mix of regulatory optimism and political risk, with the future of U.S. digital asset rules depending on whether lawmakers can turn a fragile compromise into law.
To understand broader US crypto rules beyond Trump’s ethics move, explore our breakdown in this guide on future regulation.
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