《CLARITY Act》 Faces Dual Setback: Ethical Negotiations Collapse, Only 31-Day Window Before Senate Adjournment

BlockBeats News, June 11th, The "Cryptocurrency Market Structure Act" (known as the CLARITY Act) faced dual resistance in the U.S. Senate during its advancement. On Tuesday, a bipartisan group of senators met behind closed doors with Patrick Witt, Director of the White House Crypto Council, but the meeting was unproductive. The Republican Party and the White House overturned the preliminary ethical agreement reached before the May Banking Committee hearing, retracting the provision that allowed state attorneys general to sue the Department of Justice for failure to enforce the law. Legal experts pointed out that the state attorneys general could compel the Department of Justice to take action, which is legally unsustainable. The Republicans instead proposed limiting enforcement authority to federal prosecutors and using impeachment as an alternative accountability mechanism. However, Democratic senators called this a complete reversal, leading to a stalemate in negotiations, with further discussions expected on Thursday. Democratic Senators Gallego and Alsobrooks have explicitly stated that their support for the bill depends on whether a strong ethical firewall against Trump's crypto business interests can be included—Reuters estimates that Trump and his family have profited around $2.3 billion since returning to the White House.

Another major hurdle comes from law enforcement's concerns regarding Section 604 (the "Blockchain Regulatory Clarity Act")—this provision explicitly states that non-custodial software developers are not liable for third-party use of their code, but law enforcement believes this may weaken investigations into on-chain money laundering and other crimes. On Wednesday, the White House Crypto Council will convene representatives from the Sheriff's Association, the Fraternal Order of Police, as well as the Departments of Justice, Treasury, and FinCEN to discuss this provision. Government officials plan to emphasize that the provision does not provide a shield for criminals. Senators Warner and Cortez Masto have stated that they will not support the bill unless law enforcement's concerns are adequately addressed. The U.S. Senate has only 31 legislative days left before the August recess, which is widely seen as the informal deadline for passing bills before the midterm elections.

Meanwhile, the House Ways and Means Committee held a hearing on cryptocurrency taxation on Tuesday, deliberating on six Republican-led bills and a discussion draft covering mining, staking reward tax treatment, voluntary disclosure programs, among others. However, issues such as the minimum exemption threshold for small Bitcoin transactions, DeFi, and international tax frameworks remain unresolved.