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

BlockBeats News, June 11th, The "Cryptocurrency Market Structure Act" (also known as the CLARITY Act) encountered dual resistance during its advancement in the U.S. Senate. On Tuesday, a bipartisan group of senators' closed-door meeting with White House Cryptocurrency Task Force Director Patrick Witt ended in a stalemate, as the Republicans 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 lack of enforcement. Legal experts pointed out that the state attorneys general could compel the Department of Justice to take action, which was constitutionally questionable. In turn, the Republicans proposed restricting enforcement authority to federal attorneys general and using impeachment as an alternative accountability mechanism. However, Democratic senators called this a complete reversal, leading to a deadlock 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 it can include a strong ethical barrier against Trump's cryptocurrency business interests—according to Reuters estimates, Trump and his family have profited approximately $2.3 billion since returning to the White House.

Another major obstacle 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 worries that this may weaken tracking of on-chain money laundering and other crimes. On Wednesday, the White House Cryptocurrency Task Force will convene representatives from the Sheriff's Association, the Fraternal Order of Police, and agencies such as the Department of Justice, the Treasury Department, and FinCEN to discuss this provision in detail. 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 its August recess, which is widely seen as an informal deadline for passing bills before the midterm elections.

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

According to PolyBeats monitoring, on the prediction market Polymarket, the probability of the CLARITY Act passing within the year is currently at 48%.