[Digital Today reporter Jinju Hong (홍진주)] The CLARITY bill, a key U.S. Senate crypto market structure measure, is losing momentum amid partisan conflict over provisions to enforce ethics rules. Signs of strain are also emerging in bipartisan talks as Senate Republicans and the White House step back from an enforcement compromise that had been discussed earlier.

CryptoSlate reported on June 10 that the biggest issue in negotiations is a provision that would allow state attorneys general to sue the Justice Department if the federal government fails to properly enforce crypto-related ethics rules. Democrats see the mechanism as a key means of ensuring the rules are effective, but Republicans oppose it, saying it raises constitutional problems by effectively allowing state governments to take legal action against federal officials and Congress.

Republicans have recently presented a less stringent package of ethics guardrails in meetings, and are also said to have considered excluding the disputed provision from the bill. That has added to uncertainty over whether the CLARITY bill can clear the hurdle of the full Senate.

The CLARITY bill passed the Senate Banking Committee on May 14 by 15-9, but it needs at least 60 votes on the Senate floor to overcome a filibuster. Even if all Republicans back it, at least 7 Democrats would need to join them.

The problem is that even Democratic senators who voted for it in committee are not guaranteeing support on the Senate floor. Senator Ruben Gallego (루벤 가예고) said publicly he could vote against it on the floor if the key issues are not resolved. Senator Angela Alsobrooks (앤절라 올스브룩스) also said her committee vote in favor was not support for the bill itself but a decision to keep negotiations going.

The dispute over ethics rules has continued for months. Democrats have argued since 2025 that conflict-of-interest provisions should be included in a market structure bill, but drafts later made public gradually scaled back or removed related content. In particular, a revised 309-page version released in May omitted the provisions entirely, intensifying pushback among Democrats.

The conflict continued during committee review. Democratic Senator Chris Van Hollen (크리스 밴 홀런) submitted an amendment to restrict business ties with the crypto industry for senior officials including the president and vice president, but it was rejected in a vote of 11-13. Democrats view this as a key flaw in the bill, while Republicans say ethics issues can be handled through separate legislation or a floor amendment.

The core of the current negotiations depends on whether Democrats can secure a meaningful enforcement mechanism that they can explain to voters. The White House also is not opposed in principle to ethics rules themselves, but is maintaining its stance that they should apply uniformly across the government rather than in a way that targets specific individuals.

Beyond ethics, the coalition for passage on the Senate floor remains fragile. Democrats are taking issue with anti-money laundering provisions, and an amendment backed by Elizabeth Warren to strengthen the Treasury Department's authority to sanction decentralised finance services was also blocked in committee after all Republicans voted against it. There is continuing pushback from both the industry and Democrats over how to define decentralised finance regulations. Some compromise has been reached on the issue of stablecoin interest payments, but banks' concerns about deposit outflows have not been fully resolved.

Procedural hurdles also remain. The Senate Banking Committee text must be merged with parallel legislation from the Senate Agriculture Committee, and even if it passes the Senate it would need approval again in the House. The House passed its own bill in July 2025 by 294-134. In this situation, a delay in reaching an agreement on ethics provisions could make it difficult to move not only on the June floor schedule but also before the August recess.

Still, the market has not fully ruled out the bill's chances. Alex Thorn (알렉스 손) of Galaxy Research assessed the likelihood of passage this year at about 60 percent. But if Democrats withdraw support on the view that the ethics provisions are too weak, the schedule for action in the current session could still collapse.

Ultimately, the fate of the CLARITY bill depends less on the direction of the crypto regulatory framework than on whether politicians can compromise over who will enforce the rules and how.