US President Donald Trump has agreed to an ethics provision for the Clarity Act. The rule prohibits federal officials from issuing cryptocurrencies while in office. Enforcement now goes to the US Department of Justice (DOJ) instead of state attorneys general.
The Clarity Act is the first comprehensive federal market-structure law for digital assets in the United States. Its formal name is the Digital Asset Market Clarity Act. It splits oversight between the SEC and the CFTC. The CFTC would receive exclusive jurisdiction over spot markets for digital commodities. Meanwhile, the SEC would remain responsible for assets that carry the character of an investment contract. The House of Representatives first passed the bill in July 2025, and the Senate Banking Committee followed in May 2026. Since then, the measure has been ready for a full Senate vote under Calendar No. 423. The ethics question remains the last unresolved hurdle. Passage requires 60 votes. However, Republicans hold only 53 seats and therefore need at least seven Democratic votes.
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DOJ to enforce the Clarity Act ethics rule
The provision bars the president, the vice president, and members of Congress. They may not issue or offer digital assets while in office. The decisive point, however, is not the ban itself but the question of who enforces it. Under the agreed language, that authority sits with the Department of Justice. It no longer rests with the attorneys general of the individual states. Several people familiar with the negotiations confirmed the issuance ban, and two of them confirmed the DOJ's jurisdiction.
The agreement came together only after months of negotiations. On 16 July 2026, Trump met with Republican Senators Bernie Moreno and Cynthia Lummis. Patrick Witt, the White House's top crypto adviser, also attended to settle the ethics language. Four days later, the president finally gave his approval late in the evening.
Dropping the state AGs changes the logic of oversight fundamentally. Originally, a compromise proposal envisaged that state attorneys general could sue the Department of Justice. They could act if it failed to enforce the ethics rules. That mechanism disappeared in the language now agreed. Moreover, the exact statutory text was not yet public at the time of the agreement. That is why all details rest on anonymous sources.
Democrats see a conflict of interest at the DOJ
For Democrats, the problem lies precisely in this shift. Todd Blanche, Trump's former personal attorney, is currently going through the confirmation process to lead the Department of Justice. A DOJ under his leadership would therefore have to police potential ethics violations by the very president he previously represented. As a result, Democratic criticism puts exactly this conflict of interest at the center.
Senator Angela Alsobrooks (D-Maryland) is one of two Democrats who voted the Clarity Act out of the Banking Committee. She described the DOJ-led enforcement, however, as unserious and threatened to reject the bill in this form.
"This enforcement through the DOJ on an ethics provision? That is an unserious offer, and I would not support the bill with this language. But we are working from this basis to reach an agreement that holds all of us accountable." - Angela Alsobrooks, US Senator (D-Maryland)
The White House dismissed the objections. A spokesperson did not confirm the exact language but said the administration was working with Congress on passage. In the event of failure, however, he pre-emptively blamed the Democrats. In total, only Alsobrooks and Ruben Gallego have so far voted in favor among the committee Democrats. Both did so on the condition of enforceable ethics rules.
Seven Democratic votes decide the deadline
The arithmetic in the Senate leaves the administration little room. Passage requires 60 votes, while Republicans hold only 53 seats. At least seven Democrats would therefore have to agree, yet only two have voted in favor in committee so far. Each of these votes hinges on whether the ethics rules can actually be enforced.
At the same time, the time pressure is mounting. The 7 August 2026 counts as the practical deadline before the Senate's summer recess. If it is missed, a vote would consequently likely slip to November 2026 because of the midterm elections. Earlier, a vote expected for late June had already been delayed.
Besides the ethics question, two further points of contention remain open. The first concerns a liability exemption for non-custodial software developers, which an association of district attorneys has protested. The second involves a dispute over stablecoin interest income. It particularly affects Coinbase's roughly USD 1.35 billion in annual USDC earnings.
Trump's crypto income sharpens the ethics debate
The ethics provision is contentious above all because of Trump's own business dealings. His financial disclosure, a 927-page document from July 2026, reported roughly USD 1.4 billion in crypto-related income for 2025. Of that, about USD 635 million came from licensing fees for the TRUMP memecoin. Several hundred million more came from sales of World Liberty Financial tokens. Depending on the analysis, this partial sum ranges between roughly USD 500 million and USD 799 million.
At the center stands World Liberty Financial, a DeFi company co-founded by the Trump family in 2024. Some 75% of WLFI token sales flow to a Trump entity in which the president holds 70%. In total, the family controls roughly 22.5 billion WLFI tokens. Furthermore, a Reuters analysis cited via Crypto in America puts the family's total crypto-related earnings at roughly USD 2.3 billion. That figure covers the period since Trump took office.
At the same time, several analyses paint the opposite picture on the investor side. For both the TRUMP memecoin and WLFI tokens, retail investors nevertheless recorded substantial losses. Precisely this contrast gives the question of enforceable ethics rules its political weight.
