Negotiations over the long-awaited US Digital Asset Market Clarity Act—known as the CLARITY Act—have reportedly narrowed to one of the most politically sensitive issues: ethics rules for federal officials and who will enforce them. After months of drafting and bargaining, a dispute over a “code of conduct” element is now threatening to derail a bill that many in the industry view as crucial for regulatory certainty.

Democratic senators say the current version of the proposal does not go far enough, particularly on ethics provisions covering elected officials and related consumer and market-integrity safeguards. Republicans, meanwhile, argue that ethics enforcement should remain within the Department of Justice (DOJ) under a single national framework, rather than being handled by state attorneys general.

Key takeaways

• Seven Democratic senators said the current CLARITY Act text “falls short,” calling for stronger ethics, consumer protection, illicit finance, conflict-of-interest, and market-integrity provisions.
• The latest draft would bar senior federal officials and their spouses from issuing or sponsoring digital assets while in office, alongside limits on crypto platforms listing such assets.
• Democrats want ethics enforcement to allow state attorneys general to step in if DOJ does not enforce the law; Republicans insist DOJ should be the sole enforcement channel.
• Multiple policy and industry stakeholders say lawmakers may still be able to compromise, but uncertainty over ethics is becoming the central bottleneck.
• Even if senior officials are restricted from sponsoring or issuing new tokens, the draft would still allow covered officials to own cryptocurrencies.

What the new CLARITY ethics language would change

According to the latest Senate draft made public Wednesday, the CLARITY Act would prohibit the president, vice president, members of Congress, and other senior federal officials—along with their spouses—from issuing or sponsoring digital assets while they are in office. This would apply to officials covered under the bill’s ethics framework.

The draft also includes a platform-facing restriction: crypto platforms would be prevented from listing assets issued or sponsored by covered officials. As described in coverage of the text, these prohibitions are set to expire in 2029, after President Donald Trump’s current term ends.

Importantly for investors and market participants, the restrictions would focus on “issuing or sponsoring” while in office, not on personal ownership. Covered officials would still be allowed to hold cryptocurrencies even during the restricted period.

Why Democrats say the proposal isn’t strong enough

In a joint statement released Wednesday, seven Democratic senators argued that the bill’s current provisions are inadequate. They said “key provisions,” including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest, and market integrity, must be strengthened.

“Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened,” the senators said.

Senator Angela Alsobrooks—speaking at a Semafor event on Wednesday—stated that while negotiations may be “fairly close,” the ethics language remains a dealbreaker. She indicated she would not support the legislation on the Senate floor unless it includes stronger ethics provisions.

Alsobrooks’ primary concern is both the substance and the enforcement structure. She said it cannot be taken for granted that DOJ will enforce the law effectively, framing the issue as a credibility problem rather than a purely theoretical one.

Democrats’ stance has been amplified by scrutiny of President Trump’s growing crypto-related business interests, which have reportedly included meme coin activity and a broader portfolio of digital asset exposure. Critics argue that this creates incentives and potential conflicts that stronger ethics and enforcement mechanisms should address.

Senator Elizabeth Warren has also signaled that she views the draft as insufficient, arguing that it would not prevent the president from profiting from new crypto activity in a way that could be economically significant. Separately, former SEC official Amanda Fischer argued that the restrictions could still allow the president to benefit from existing crypto projects, with the proposed limitations aimed at future income streams.

Republicans push for DOJ-only enforcement

Republicans contest the idea that the ethics provisions are too weak, while also objecting to Democratic calls for additional enforcement leverage for state attorneys general. They argue that federal ethics requirements should be enforced through a single national mechanism—DOJ—rather than through a patchwork of state interpretations and political priorities.

Attorney and former Republican Senate candidate John Deaton said the CLARITY Act is federal legislation and that DOJ, not “fifty different state AGs,” is the appropriate body to enforce federal law. In this view, allowing state officials to intervene would risk undermining the uniformity that supporters say the bill is intended to provide.

Other Republican-aligned commentators characterized the ethics language as unprecedented. For example, Senator Bernie Moreno described the current draft as containing “the most powerful ethics language in US history.”

Patrick Witt, a former White House and Senate counsel, suggested the disagreement may be driven by two incompatible Democratic positions: that ethics rules would be meaningless without state AG enforcement, or that the proposal could not be changed in a way that would satisfy concerns about constitutional constraints. Witt argued that endorsing the first position would effectively dismiss the enforceability premise behind existing federal ethics laws, while the second position would be difficult or impossible to meet without violating constitutional principles.

Industry and policy observers see a path—but not an easy one

Despite the ethics dispute, many observers believe the bill can still progress through negotiation. Kristin Smith, former CEO of the Blockchain Association and now president of the Solana Policy Institute, told Cointelegraph that the latest draft reflects meaningful compromise on ethics—an element viewed as necessary for Senate Democrats to come closer to supporting the measure.

Smith also emphasized that ethics is only one component of the broader package. She pointed to additional elements added to the Senate’s work, including a disclosure regime, an illicit finance section, and improved spot market regulation. In her view, rejecting the bill on ethics alone could mean lawmakers lose more than just the ethics language—they could lose the rest of the regulatory structure altogether.

“There is no version of a ‘no’ vote that produces a stronger bill,” Smith said. “A ‘no’ vote produces no bill at all: no disclosure regime, no illicit finance protections, no spot market improvements, no ethics provisions, nothing.”

Vincent Chok, co-founder and CEO of stablecoin issuer First Digital, likewise suggested that narrowing negotiations to ethics rather than the overall structure indicates progress. He framed the question less as whether the US needs a framework and more as how to finalize one that can attract broad support.

Chok argued that no regulatory scheme is likely to be perfect at the start, but businesses can adjust if the market gets clarity. Long periods of uncertainty, he said, make it harder to justify long-term investment and product development.

Other industry figures expressed cautious optimism while still criticizing how far the initial ethics proposal goes. Salman Banaei, head of public policy at Plume, a blockchain network focused on tokenized real-world assets, said compromise may be possible, but cautioned that the White House’s initial ethics proposal was “not a good starting point.”

At the heart of the debate remains the enforcement question: the current draft appears to rely heavily on DOJ for ethics implementation, while Democrats want a mechanism that gives state attorneys general a clearer role if federal enforcement falls short. How lawmakers balance these competing views—without stalling the broader CLARITY framework—may determine whether the bill reaches the next stages.

As negotiations continue, the key variable for readers is whether the parties can agree on an enforcement structure that satisfies Democrats’ concerns about DOJ reliability while preserving Republicans’ push for a single federal enforcement lane. With the bill’s timetable dependent on this remaining sticking point, investors and builders should watch for the next revised ethics draft and any accompanying language changes that clarify whether enforcement authority can shift beyond DOJ.

The long-awaited US Digital Asset Market Clarity Act (CLARITY) has hit another snag.

This time, it’s not software developers or the turf war between federal regulators at stake, but the thornier question of ethics — ironic, given many politicians’ demonstrable disdain for them.

After months of negotiations and what Coinbase’s chief executive Brian Armstrong called “thousands of hours of work on both sides,” disagreement over a code of conduct could make or break CLARITY once and for all.

Pretty much everyone agrees the United States needs clearer rules around digital assets. But negotiators are divided over whether the bill’s ethics provisions are strong enough, and, more importantly, who should enforce them.

Democrats worry the current proposal relies too heavily on the Department of Justice, arguing state attorneys general should be able to step in if the DOJ fails to enforce the law.

In a joint statement Wednesday, seven Democratic senators said the Republican proposal “falls short.”

“Key provisions including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest and market integrity must be strengthened,” the senators said.

For their part, Republicans are pushing to keep enforcement of the ethics provisions with the DOJ, arguing that federal rules should be enforced through a single national framework. Attorney and former Republican Senate candidate John Deaton said Wednesday:

“The CLARITY Act is federal legislation… The Department of Justice – not fifty different state AGs with fifty different political incentives and fifty different interpretations – is the appropriate body to enforce federal law.”

Can lawmakers find a middle path before the bill reaches the Senate floor, or has the ethics debate become CLARITY’s biggest obstacle yet?

What the latest ethics proposal actually does

The latest Senate draft made public Wednesday would prohibit the president, vice president, members of Congress and other senior federal officials and their spouses from issuing or sponsoring digital assets while in office.

Democrats oppose current CLARITY text. Source: Senator Ruben Gallego

That means future presidential meme coins would be off the table, at least temporarily, with no Trump 2.0 or Melania 2.0-style token launches while the restrictions are in play.

Related: CLARITY Act could help CFTC deal with prediction markets: Lawyer

The proposal would also prevent crypto platforms from listing assets issued or sponsored by covered officials.

Restrictions would expire in 2029, after President Donald Trump’s current term ends, though covered officials would still be permitted to own cryptocurrencies.

Democrats say current proposal falls short

Democrats have made it clear the text needs additional work before gaining their support, but getting CLARITY over the line isn’t doomed; they’ve also signaled a willingness to see the bill through to the end.

“We have been working in good faith with our Republican colleagues for the past year and will continue doing so to get this over the finish line,” the senators said.

Senator Angela Alsobrooks said negotiators were “fairly close” to reaching an agreement during a Semafor event on Wednesday, despite warning the ethics provisions remained a dealbreaker. The Maryland Democrat said:

“Although I have been supportive to this point, I absolutely will not support on the floor any legislation that does not include provisions around ethics.”

Her main concern is not only the substance of the rules, but who would enforce them.

“It’s an absolute that we cannot completely rely on the DOJ, given what we’ve seen of their inability and their unwillingness to enforce the law,” Alsobrooks said.

The debate has been fueled by Trump’s rapidly expanding crypto business interests spanning meme coins, World Liberty Financial and other digital asset holdings.

Related: Trump claims he can ‘future proof’ crypto regulation with CLARITY Act

The President’s crypto ventures have reportedly generated $1.4 billion on paper, prompting Democrats to argue stronger safeguards are needed to address potential conflicts of interest.

Senator Elizabeth Warren has focused on whether the restrictions go far enough, with the Massachusetts Democrat saying that the latest draft “does nothing to stop President Trump from making his next $1.4 billion from crypto.”

Former SEC official Amanda Fischer also argued the draft would still allow Trump to benefit from his existing projects, with limited restrictions on future crypto income streams.

Republicans say proposal already unprecedented

Republicans reject the idea that the ethics provisions are weak. Senator Bernie Moreno described the draft as containing “the most powerful ethics language in US history,” pushing back against Democratic claims that the provisions are insufficient.

The latest CLARITY Act text. Source: US Congress.

Patrick Witt, a former White House and Senate counsel, said Democratic opposition appeared to rest on one of two positions: either that ethics rules without state attorneys general are “meaningless,” or that they fail to penalize President Trump for past crypto activity.

“If you hold position (1), then you are basically saying that ALL current federal ethics laws are meaningless because none of them are enforceable by state AGs,” he said. “If you hold position (2), then there is literally nothing that can be done to appease you because what you are advocating for is blatantly unconstitutional.”

Others argue that, even if the legislation is imperfect, passing it would be preferable to preserving the status quo. Andreessen Horowitz co-founder Chris Dixon said the US has a similar opportunity to the early internet era, when lawmakers established rules that allowed innovation to flourish rather than forcing new technology into outdated regulatory frameworks.

While acknowledging that “no law is perfect,” Dixon argued the CLARITY Act would deliver long-overdue consumer protections and provide regulatory certainty for blockchain innovation in the US.

Can lawmakers find a middle path?

Despite stumbling over the ethics hurdle, most industry and policy observers still believe a deal remains in reach.

Kristin Smith, former chief executive of the Blockchain Association and now president of the Solana Policy Institute, sees that the latest draft is already a meaningful compromise.

“The new text includes a substantive, one-of-a-kind ethics provision, a necessary step to win the support of Senate Democrats,” Smith told Cointelegraph.

“But ethics is far from the only thing at stake. The Senate has added a full disclosure regime, an entire illicit finance section, and improved spot market regulation.”

Smith warned that rejecting the bill in pursuit of stronger ethics language could leave lawmakers stuck with no market structure legislation at all.

“There is no version of a ‘no’ vote that produces a stronger bill,” she said. “A ‘no’ vote produces no bill at all: no disclosure regime, no illicit finance protections, no spot market improvements, no ethics provisions, nothing.”

Vincent Chok, co-founder and chief executive of stablecoin issuer First Digital, said the fact negotiations have narrowed to ethics rather than the broader structure of the bill is itself a sign of progress.

“The core debate is no longer whether digital assets need a regulatory framework, but how to finalize one that commands broad support,” Chok told Cointelegraph.

He said that while no regulatory framework is likely to be perfect from day one, businesses can adapt to clear rules that evolve over time. Prolonged uncertainty makes long-term investment and product development far more difficult, he said.

Salman Banaei, head of public policy at Plume, a blockchain network focused on tokenized real-world assets, also believes a compromise remains possible, although he cautioned that the White House’s initial ethics proposal “is not a good starting point.”

For now, both sides appear to agree on one thing: a compromise is still possible, but exactly what it looks like remains the biggest unanswered question.

Magazine: Will the crypto lobby’s $189M campaign get CLARITY over the line?

David Solomon, chair and CEO of financial giant Goldman Sachs, has given his support for a “not perfect” cryptocurrency market structure bill under consideration in the US Senate even as many provisions continue to divide lawmakers and his fellow industry leaders.

According to a Thursday Politico report, Solomon said that the Digital Asset Market Clarity (CLARITY) Act was “not perfect” but needed to create a “level playing field to enhance market stability.” Solomon stands out as the head of a major financial company backing the legislation, which many of his peers are opposing by arguing that the bill allows crypto companies to pay users interest or yield on stablecoins outside standard rules for financial institutions.

“The CLARITY Act — like all legislation — is not perfect,” said Solomon, according to Politico. “And there are lots of things that you could debate and argue about. But I think one of the most important things that it does is that it creates a level playing field to enhance market stability and allow these markets to develop appropriately.”

Republican lawmakers released the text of the CLARITY Act on Wednesday ahead of a potential vote in the Senate, including provisions on ethics that have concerned many Democrats due to US President Donald Trump’s crypto investments. As of Thursday, Senate leaders had not scheduled a vote on the bill.

Related: CLARITY Act stablecoin yield rules finalized: ‘Go time’ for crypto bill

Solomon was one of the few leaders in traditional financial companies to support the crypto bill. Jamie Dimon, who heads JPMorgan Chase, said in a May interview that CLARITY allows crypto companies to pay interest on stablecoins “without the protection that they should have,” something that banks would not accept.

Many Democrats say ethics rules in CLARITY don’t go far enough

While the crypto market structure bill is expected to head for a vote in the Senate soon, Republicans there will need some Democratic support to meet the 60-vote threshold. However, many Democrats said that the ethics provisions pushed by Republicans aren’t earn to earn their votes, in part because it leaves enforcement to the US Justice Department instead of state authorities.

”The bill goes even further to protect the President’s crypto profits by barring the next Department of Justice from ever holding Trump accountable,” said Senator Elizabeth Warren on Wednesday. ”On top of all of this, the underlying bill still fails to adequately protect investors, our financial system, and our national security. This bill should be dead on arrival,” the Massachusetts Democrat said.

Magazine: Why the CLARITY Act’s Ethics Fight Could Derail the Market Structure Bill

Hyperliquid’s $HYPE fell to around $58 earlier Wednesday as large staking withdrawals queued up, bringing a sizable supply overhang into the market over the next week. On-chain data compiled by Block Liquidity points to a coordinated set of unstaking and withdrawal requests involving multiple major crypto funds.

According to Block Liquidity’s flow tracking, Multicoin Capital controls a combined $138.78 million worth of staked HYPE, with about 83%—roughly $116 million—showing up as pending withdrawal. Separately, Selini Capital and Galaxy Digital have also queued withdrawals totaling $4.4 million and $29.4 million, respectively. Block Liquidity also flags a Multicoin-linked wallet depositing approximately 167,000 HYPE (about $11.2 million) to Coinbase, suggesting at least some tokens may be routed for potential sale or other handling.

Key takeaways

• Block Liquidity data shows Multicoin has about $116M in HYPE pending withdrawal, forming the bulk of the near-term unlock.
• Across the tracked queues, funds total roughly $150M in HYPE—large versus the token’s relatively thin spot market.
• HYPE spot liquidity has not matched the scale of withdrawals; Block Liquidity recorded $72.8M in HYPE spot volume over ~28 hours.
• Selini’s unstaking appears tied to the shutdown of a HIP-3 CASH perpetuals market, leaving open whether tokens are reallocated or sold.
• Multicoin managing partner Tushar Jain said the unlocked HYPE was not intended for selling, but where the July 28 liquidity ends up remains the key question.

Unstaking queues create a near-term supply overhang

The immediate pressure on HYPE came from the scale of withdrawals initiated by market participants. Pending unlocks are expected to be processed over roughly five to seven days, which effectively places a large amount of newly available HYPE into the liquid ecosystem on a compressed timeline.

While HYPE perpetuals volumes are substantially larger—reported around $400M daily for perps—the spot market is materially smaller. Block Liquidity recorded just $72.8M of HYPE spot volume across approximately 28 hours leading up to Wednesday morning, with 1,463 unique buyers and 982 sellers. Wintermute stood out as the largest net buyer at over $9M, while the biggest net seller reduced exposure by about $5.2M.

That imbalance—withdrawal queues that can approach $150M versus daily spot turnover that is far lower—helps explain why traders reacted quickly when the unlocks became visible. Even if not all tokens are sold, the market often prices in uncertainty around absorption capacity, especially when spot liquidity is thin relative to the potential supply.

Whether tokens get sold is unclear

The main variable for investors and traders is straightforward: do these withdrawals translate into market selling, or do they get redeployed elsewhere within Hyperliquid’s ecosystem?

For Selini Capital, the unstaking appears connected to the shutdown of HIP-3 CASH perpetuals markets run under the HIP-3 framework. The withdrawal activity is associated with Selini’s unstaking flow (see Selini-linked address on Hyperevmscan). The broader context points to DreamCash posting that relevant markets struggled to maintain liquidity, particularly as USDC became more entrenched in Hyperliquid’s trading environment.

Under HIP-3 deployments, a builder-deployed perpetual requires staking 500,000 HYPE as a slashable security bond. That bond is intended to be refunded when a market goes defunct, turning the unlock into something closer to a “release of collateral” than a direct liquidity event. That said, collateral can still be sold—potentially through OTC channels—depending on the fund’s strategy and risk posture.

As a result, the market’s near-term direction depends on what happens after the July 28 unlock and subsequent processing window. HYPE had dropped about 11% over the past week at the time of reporting, and even after recovering modestly from the day’s lows, it had not yet returned to earlier highs.

Multicoin’s role: potential redeployment rather than liquidation

While Selini’s unlock is tied to closing a specific HIP-3 market, Multicoin’s pending withdrawal could represent either liquidation or a reallocation into a new deployment. The distinction matters: redeployments into new perps can keep tokens within the ecosystem, while sales put downward pressure on both spot and potentially perp pricing if the sell pressure is large enough.

Multicoin was also recently involved in a Hyperliquid-linked venture bet. Last week, the firm led a $1.75 million seed round into Trasia, described as an Asia-focused, non-custodial trading platform aiming to launch perpetuals for Asian equities. Managing partner Tushar Jain said in an X post that Trasia is targeting “net new users” unfamiliar with Hyperliquid.

In a later Wednesday update on X, Jain also claimed that the HYPE being unstaked was not intended for selling. That statement directly addresses the question traders are asking: whether the visible withdrawal queue turns into a dumping event or becomes collateral movement toward a new deployment.

Investors will likely watch the July 28 unlock closely to see where the assets go next. If HYPE is redeployed into new HIP-3 markets or other ecosystem uses, the market may stabilize once immediate selling risk fades. If, however, the tokens are moved to venues in a way that suggests liquidation, the overhang could persist longer than the processing window itself.

Market watch: follow the flow after the unlock window

For now, HYPE’s near-term price action appears less about long-term demand and more about supply mechanics: how quickly pending withdrawals convert into spot selling versus redeployment. The decisive signal will be the post-unlock routing—whether tokens flow into new perpetual deployments or toward exchanges—particularly in the days surrounding the July 28 release.

South Korea’s Mirae Asset has completed its acquisition of cryptocurrency exchange Korbit. The financial group plans to increase its existing ownership stake from 92.06% to 97.15%.

The acquisition makes Mirae Asset the first financial group in South Korea to acquire a local cryptocurrency exchange.

Mirae Asset Acquires Korbit

Mirae Asset Financial Group is set to take control of South Korean cryptocurrency exchange Korbit through its affiliate, Mirae Asset Consulting. The latter completed the acquisition of the exchange, bringing its stake to 92.06%. Mirae Asset has also submitted a revised regulatory filing to increase its stake to 97.15%. The acquisition raises Mirae Asset’s cumulative investment in the exchange from 133.5 billion won to 141.4 billion won.

South Korea’s Fair Trade Commission approved the deal earlier this month, determining that the acquisition was unlikely to decrease market competitiveness. Korbit had only a 0.5% share of South Korea’s cryptocurrency market as of 2025.

A Global Investment Platform

The acquisition is part of Mirae Asset Financial Group’s mid- to long-term strategy. The group plans to leverage the exchange and develop a global investment platform that encompasses digital assets and traditional finance. Park Hyeon-joo, Mirae Asset Financial Group founder, stated that Korbit will relaunch as Digital X under the group’s Mirae Asset 3.0 vision.

“Digital X will serve as the most powerful engine for realizing Mirae Asset 3.0.”

Meanwhile, Korbit assured existing users that its services will remain unchanged, and user deposits and virtual assets will be held and managed separately. The exchange added that there will be no changes to how it is used or processed.

“Building on Mirae Asset’s stability and financial expertise, we will further strengthen user protection and service competitiveness and continue to grow as a trusted digital asset platform.”

According to CoinGecko, Korbit is South Korea’s fourth-largest cryptocurrency exchange by trading volume, recording around $4.3 million in the past 24 hours. In comparison, Upbit, the country’s largest cryptocurrency exchange, processed over $224 million.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.