A bipartisan Senate group working on the CLARITY Act crypto bill saw negotiations stall on Tuesday after Republicans walked back ethics provisions previously agreed upon in earlier discussions. Democratic senators left the meeting disappointed, with sources describing the reversal as an 'about face' from tentative terms reached before the Senate Banking Committee markup in May. The impasse centers on language that would allow state attorneys general to sue the Department of Justice over ethics enforcement related to President Trump, with Republicans now citing concerns from senators outside the negotiating group. The group is scheduled to reconvene Thursday to attempt to resolve the standoff, while separate law enforcement concerns over blockchain investigative authority remain unresolved.
Republicans Walk Back Ethics Provisions in Tuesday Meeting
The bipartisan group reconvened for the first time since reaching a provisional ethics deal before the Senate Banking Committee's markup of the bill in May. That earlier tentative agreement included Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno, and Cynthia Lummis, alongside Patrick Witt, the White House Crypto Council Executive Director.
One of the most significant sticking points centered on a CLARITY Act provision that would have allowed state attorneys general to sue the Department of Justice if the department failed to enforce ethics requirements connected to President Trump. Republican members and the White House walked back that authority during the Tuesday meeting, citing concerns raised by senators outside the group that similar power could be used by either party to pressure lawmakers in future disputes.
As an apparent olive branch, Republicans proposed limiting enforcement authority to the Attorney General and floated impeachment as an alternative possible remedy for ethics violations. Democrats characterized the latest ideas as an 'about face' from the earlier tentative terms. With the meeting ending without progress, the group is expected to reconvene on Thursday.
White House Schedules Law Enforcement Meeting on Wednesday
The White House Crypto Council will host representatives from the National Sheriffs' Association, the Fraternal Order of Police, the National District Attorneys' Association, and other groups on Wednesday, alongside officials from the DOJ, Treasury, and members of Congress. The meeting is expected to focus on the Blockchain Regulatory Certainty Act (BRCA). That section is intended to clarify that certain non-custodial software developers are not liable for how third parties use their code unless the developers intended for it to facilitate illicit activity.
Law enforcement groups remain concerned that certain CLARITY Act provisions could limit their ability to investigate and prosecute criminals who use blockchain technology to support money laundering and other illicit activity. Administration officials are expected to argue that the language does not shield criminals from prosecution and that it preserves law enforcement's ability to combat money laundering, sanctions evasion, and other illegal behavior.
Senators Mark Warner and Catherine Cortez Masto have signaled that they will not back the CLARITY Act unless law enforcement believes the concerns have been addressed adequately.
FAQ
What happened in the Tuesday CLARITY Act meeting?
Republicans walked back ethics provisions previously agreed upon in earlier negotiations, disappointing Democratic senators who described the reversal as an 'about face' from tentative terms reached before the Senate Banking Committee markup in May. The group is scheduled to reconvene Thursday.
Why are law enforcement groups concerned about the CLARITY Act?
Law enforcement groups worry that certain provisions, particularly in the Blockchain Regulatory Certainty Act section, could limit their ability to investigate and prosecute criminals who use blockchain technology for money laundering and other illicit activity. The White House Crypto Council is hosting law enforcement representatives on Wednesday to address these concerns.
