The CLARITY Act faces growing uncertainty as ethics negotiations remain unresolved despite some opposition to the bill softening.
- Senator Thom Tillis said that the CLARITY Act could fail to pass next week if the White House doesn't help bridge the gap on ethics language, while Senator Mike Rounds said the outlook isn't good right now.
- Democrats are still pushing for ethics rules covering the president and his family, while the White House said it's already agreed to an ethics provision.
- The NSA recently removed from opposition to a neutral stance on the bill ahead of the upcoming procedural vote on September 15.
The CLARITY Act is facing a fresh threat ahead of next week’s Senate vote, with Senator Thom Tillis (R-NC) reportedly warning the Senate’s crypto market structure bill could fail unless the White House helps bridge a standoff over ethics language, according to a Semafor report on Tuesday.
Tillis, one of the key negotiators on the legislation, told Semafor that the bill would fail if the White House shows no interest in closing the gap on ethics provisions.
The report stated that Tillis is among a group of Republican senators warning the bipartisan bill is likely to fail when the chamber returns next week. Senator Mike Rounds (R-SD) told the outlet the situation “does not look good right now.”
The Senate is scheduled to hold a procedural vote on September 15, with the legislation needing 60 votes to advance.
Ethics Fight Puts CLARITY Act At Risk
According to the report, two Democratic aides told the outlet there has been little movement on a key Democratic demand for an ethics provision governing the president and his family. However, the White House pushed back on concerns about the bill’s prospects.
A spokesperson said that President Donald Trump wants Congress to pass the CLARITY Act and said the administration has already agreed to what it called a “wide-ranging ethics provision in history.”
Law Enforcement Opposition Softens
Last week, the National Sheriff’s Association published a letter stating that it dropped its opposition to the CLARITY Act and moved to a more neutral position.
The group had raised law enforcement and public safety concerns in July, questioning parts of the bill tied to DeFi, including registration, customer identity checks, anti-money laundering controls, and sanctions requirements.
Senator Cynthia Lummis (R-WY) blamed the Democratic side of the negotiations for the stalemate and defended the Clarity Act as a bipartisan bill worth passing.
“On numerous outstanding issues, Democrats continue to demand changes that would give future regulators the ability to kill the crypto industry. If we can bridge those gaps, I’m confident we can pass Clarity, but they require further compromise from Democrats, not the White House,” wrote Lummis.
Her comments reflect a bigger dispute over ethics safeguards that has held up the bill for the past few months.
Crypto Industry Could Turn Up Political Pressure
The report also said the crypto industry might spend money on key Senate and House races if the vote fails, but one senator said it's not even close to a top issue for voters.
Senator Roger Marshall (R-KAN) downplayed the issue’s importance of the CLARITY Act, saying, “There’s nothing I can do with the crypto bill. Haven’t heard a peep about it. Nobody back home is asking about it.”
Coinbase, Circle Await Rule Clarity
The CLARITY Act would draw a jurisdictional line between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), reducing the litigation risk that has hung over Coinbase (COIN) since regulators began contesting which tokens count as securities. A failed vote leaves the question unanswered until after November.
For Circle Internet Group (CRCL), the bill would classify payment stablecoins as non-securities, allow listing and custody requirements for issuers, and strengthen USD Coin’s (USDC) regulatory position against less-regulated rivals such as Tether (USDT).
COIN stock was up over 0.8% in pre-market trade. On Stocktwits, retail sentiment around COIN dipped to the ‘neutral’ zone, while chatter remained at 'normal' levels over the past day.
By comparison, CRCL stock was up over 0.5% in pre-market trade. On Stocktwits, the retail sentiment around CRCL remained in the 'neutral' zone, accompanied by chatter at 'high’ levels over the past day.
Read also: CRCL Stock Slides Despite Analysts’ Bullish Tazapay Outlook — Deal Seen Doubling Payments Volume
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