White House Rejects Ban on Conflicts of Interest in Crypto’s CLARITY Act

When I learned that there had been a quiet, bipartisan effort to include in the CLARITY Act a conflict-of-interest provision — aimed at preventing current and future senior government officials from personally profiting from crypto—it struck me as huge news. 

I had already been interested in how President Trump’s crypto ventures were proving an obstacle to passing crypto legislation. Then I learned there had been an internal proposal for ethics safeguards for the market structure bill — and that the Trump White House had rejected them. 

In what seems like a difficult balancing act between the White House and Congress, this negotiation could make the difference in whether we get a market structure bill passed this summer. 

White House Rejects Ban on Conflicts of Interest in Crypto’s CLARITY Act

Lawmakers on both sides quietly tried to address Trump’s crypto interests in the CLARITY Act, but the White House pushed back.

A bipartisan negotiation by House Republicans and Democrats to insert conflict-of-interest guardrails into the House crypto market structure bill, primarily intended to resolve Democratic concerns over President Trump’s crypto profiteering, ran into resistance from the White House on Tuesday evening during a key phase of negotiations, multiple sources familiar with the matter told Unchained.

One source said the provision was designed to address conflicts of interest by senior political figures — such as the President, but also including the Vice President, Members of Congress, or their family members — in crypto businesses while in office. Another source familiar with the negotiations claimed both sides of the aisle worked in good faith to propose language similar to existing campaign finance and financial disclosure norms so it would not be perceived as a direct rebuke of President Donald Trump’s many crypto business activities.

Read More:​ U.S. House Agriculture Committee Advances CLARITY Act 

But the White House was not satisfied, at least for now, as it sent word that it would not accept the proposed language for the CLARITY Act, according to two sources.

“Democrats and Republicans were working in good faith to try to find some combination of language,” said one person in the room and involved in the negotiations. “We thought we had found one. Republicans worked on the text and submitted it for approval through their usual administrative review process. Ultimately, the White House rejected that version.”

Is the CLARITY Act at Risk?

Two sources familiar with the negotiations described the search for language that would appease Democrats while also not angering Trump as looking for the narrow overlap in a Venn diagram: Democrats wanted to stop Trump from enriching himself via crypto, while Republicans sought to avoid any optics that might suggest a prohibition on conflicts of interest was targeting him or meant to scold him.

It is unclear whether there will be enough common ground between Democrats, Republicans, and the White House.

Read More:​ DeFi Platforms Could Get ‘Innovation Exemption,’ SEC Chair Says

One source indicated the negotiations on this point have paused post-markup, while House Republicans and the White House work on drafting possible replacement language to present to Democrats. The hope remains that even symbolic ethics provisions could help secure more Democratic votes for a digital asset market structure bill. 

This source described the situation as fluid, as Republicans are racing to get the bill passed in the House; Trump’s White House is pressuring for both a market structure and stablecoin bill to be done before the lawmakers break for recess in July, so Trump can sign the bill in August.

One source explained that the benchmark for getting Democratic votes for the CLARITY Act is the prior Congress’s FIT21 bill, which saw 71 Democrats join Republicans to pass that market structure legislation. This time, the source believes 100 Democrats voting yes on CLARITY is needed for the Senate to take up market structure. According to another source, due to the vote of the CLARITY Act out of the House Financial Services Committee along partisan lines at 32-19, Democratic support may be lost or even come in below last year’s 71 votes. 

A White House spokesperson did not immediately respond to questions related to the White House’s position on the current status of negotiations.

Trump’s Crypto Riches

Since his abrupt transition into a pro-crypto candidate, President Trump has been busy building his crypto empire. He and his family have launched a DeFi project called World Liberty Financial, have a stablecoin, are involved in a bitcoin mining company, are in the process of launching a bitcoin ETF, and have raised $2.5 billion to launch a bitcoin treasury company. Additionally, just days before his inauguration in January, he launched the $TRUMP memecoin. 

According to Forbes, Trump has made $3.3 billion from his crypto projects, increasing his net worth to $5.6 billion.

During the markup on Tuesday, Ranking Member Maxine Waters (D-CA) introduced an amendment called ‘Stop Trump in Crypto,’ which would bar top government officials and their immediate families from controlling, promoting, profiting from, or trading digital assets while in office; it was rejected by a vote of 21-30. 

Trump’s involvement in crypto was also a factor in the Senate’s first failed attempt to move its stablecoin bill, the GENIUS Act, forward on May 9, and continues to be a sticking point for some Democrats on that stablecoin bill as well, despite the fact that stablecoin legislation was seen as one of the few bipartisan issues for this Congress at the start of the term.  

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