Clarity Act Senate Talks Hit Snags Over Ethics Rules and Banking Pushback

Senate negotiations over the Clarity Act moved into a sensitive stretch over the past day, with key issues still unresolved ahead of a possible floor vote. Journalist Eleanor Terrett reports that lawmakers are still haggling over ethics language, stablecoin standards and law enforcement priorities, and that updated bill text could arrive soon or be pushed later this week. Ethics provisions have become a central bargaining point. Terrett said industry sources are expecting revised legislative language in the near term, though the ongoing ethics talks could delay its release as senators work to finalize the package. In a Tuesday morning interview, Sen. Cynthia Lummis described several ideas under consideration, including a requirement that public officials who hold cryptocurrency place those assets into blind trusts. Lummis also said she intends to oppose a proposal that would let state attorneys general sue the U.S. Department of Justice over ethics enforcement. Terrett reported that negotiators had tentatively accepted that proposal before the Senate Banking Committee's May markup. Stablecoin language remains another major flashpoint, with banking groups continuing to challenge the emerging compromise. Sen. Thom Tillis told Brendan Pedersen that he proposed "circuitbreaker" language that would allow federal regulators to step in if there were broad deposit shifts into stablecoins. Tillis said the measure would serve as a test of the industry's deposit-flight concerns, arguing that continued opposition after such safeguards are added could suggest the risk has been overstated. Even with those proposed guardrails, the American Bankers Association, ICBA and 76 state banking associations sent a letter Monday opposing the current stablecoin compromise. Terrett reported the groups contend the yield agreement still permits stablecoins to function like interest-bearing deposits. She added that banking organizations largely pressed their case privately after the bill cleared the Senate Banking Committee, but the new letter signals a wider public effort as a Senate vote approaches. Law enforcement stakeholders remain split as well. The Federal Law Enforcement Officers Association backed the Clarity Act in a letter, while recommending targeted changes to the Blockchain Regulatory Certainty Act. The National Sheriffs' Association, by contrast, publicly opposed the bill in a new video distributed by CASE, arguing that cryptocurrency benefits criminal organizations and that the legislation would complicate enforcement. Terrett reported that Democratic senators including Catherine Cortez Masto and Mark Warner want those concerns addressed before supporting the bill. In a separate personnel update, White House negotiator Patrick Witt is set to begin mandatory Georgia Army National Guard JAG training on July 27, and Crypto Council Deputy Director Harry Jung is expected to take over Witt's responsibilities.