Clarity Act Update: Congress Heads Into The July 4 Recess

Key Insights:

• Congress enters the July 4 recess with the CLARITY Act still facing several unresolved legislative hurdles.
• Ethics negotiations remain the biggest obstacle before the crypto market structure bill reaches the Senate floor.
• Democratic support depends on stronger ethics rules addressing President Trump's crypto-related business interests and ties.

The CLARITY Act has entered a crucial stage after Congress began its July 4 recess, leaving lawmakers with a limited window to resolve key disagreements before the August break.

While the crypto market structure bill remains strong, several political and legislative hurdles must still be cleared before it can reach President Donald Trump's desk.

Republicans push to keep CLARITY Act on track

According to Crypto in America host and journalist Eleanor Terrett, Senate Republicans have renewed their efforts to move the CLARITY Act forward once Congress returns on July 13.

The urgency comes after recent events on Capitol Hill show how quickly legislative priorities can shift.

The sense of urgency increased after President Trump said he would not sign a bipartisan housing bill until Congress passes the SAVE Act, a controversial voter ID proposal.

Although Trump has not made a similar statement about the CLARITY Act, the move shows how limited Senate floor time has become and why lawmakers supporting crypto legislation are trying to avoid further delays.

Senate Majority Leader John Thune has also identified the CLARITY Act as a priority, but recently acknowledged that lawmakers are running out of time to settle the remaining issues before the congressional calendar becomes even tighter.

Ethics talks remain the biggest obstacle

Despite overall support for creating a clear regulatory framework for digital assets, the bill still faces several unresolved issues, with ethics provisions emerging as the biggest sticking point.
Democrats continue to seek stronger safeguards related to President Trump's crypto-related business interests, including his family's involvement with World Liberty Financial (WLFI).

An agreement between the White House, Republicans, and Democrats has not yet been reached, and negotiations are expected to continue throughout the recess.

The issue could prove decisive because Democratic senators Ruben Gallego of Arizona and Angela Alsobrooks of Maryland have indicated their continued support for the legislation depends on whether the final Senate version includes an ethics framework they consider sufficient.

Both lawmakers previously voted to advance the bill through the Senate Banking Committee, making their backing particularly important.

Several policy issues still need resolution

Beyond ethics, lawmakers must also resolve several technical provisions before the bill can advance.
The Senate Banking and Agriculture committees still need to reconcile differences in their versions of the legislation. Outstanding issues include state preemption, how crypto exchanges manage conflicts of interest, and rules governing affiliate trading.
Another unresolved topic is the Blockchain Regulatory Certainty Act (BRCA).

Law enforcement organizations and several advocacy groups have continued to oppose its inclusion, saying that it could make it more difficult for authorities to investigate crimes such as human trafficking involving digital assets.

Stablecoin yield has also remained a topic of discussion. While congressional staff have suggested that earlier compromises have not been reopened, banking associations continue to lobby senators, arguing that the current provisions require further changes.

The bill’s future could be decided in July

Even if lawmakers reach agreements on the remaining issues, the legislative calendar presents another challenge.
The Senate is expected to prioritize the annual defense authorization bill when lawmakers return, leaving a potential vote on the CLARITY Act later in July. That compressed timeline has led many observers to describe July as the bill's make-or-break month.
Galaxy Digital head of research Alex Thorn recently lowered his estimate of the bill passing this year from 60% to 50%, citing the shrinking legislative calendar, the absence of a scheduled Senate floor vote, and the lack of announced agreements on major issues.