TLDR:

• Senate negotiators failed to resolve a major ethics dispute tied to the Clarity Act this week.
• White House officials met law enforcement groups over concerns about blockchain crime enforcement.
• Democratic support hinges on stronger ethics provisions linked to Trump’s crypto ventures.
• House lawmakers reviewed crypto tax reforms as Congress races against a tight calendar.

The Senate’s push to advance the Clarity Act encountered fresh resistance this week as lawmakers failed to resolve a key ethics dispute tied to the legislation. Negotiators left a closed-door meeting without an agreement, raising new questions about the bill’s path to a floor vote. 

At the same time, the White House stepped up efforts to address concerns from law enforcement organizations. The developments arrive as Congress faces a shrinking legislative window before the August recess.

Clarity Act Ethics Debate Delays Senate Progress

A bipartisan group of senators met Tuesday alongside White House Crypto Council Executive Director Patrick Witt to revisit an ethics agreement discussed before the Senate Banking Committee markup in May.

The talks included Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno, and Cynthia Lummis. However, participants failed to reach a new consensus.

According to reporting cited by Eleanor Terrett and Crypto In America, Republicans and White House officials withdrew support for parts of a tentative agreement discussed earlier.

One disputed provision would have allowed state attorneys general to challenge the Department of Justice over failures to enforce ethics rules involving President Donald Trump.

Republican negotiators raised concerns that the mechanism could create broader legal risks for members of Congress. Legal questions also emerged regarding whether state officials could compel federal enforcement actions.

Democratic lawmakers viewed the revisions as a departure from previous discussions. As a result, negotiations ended without a breakthrough, and participants reportedly described the process as difficult.

The negotiating group plans to meet again Thursday. Ethics provisions remain a central issue for Democrats seeking stronger safeguards related to Trump’s crypto business interests.

Clarity Act Law Enforcement and Crypto Tax Issues Gain Focus

Beyond ethics concerns, lawmakers continue to debate how the Clarity Act could affect criminal investigations involving blockchain technology.

The White House Crypto Council scheduled a meeting with representatives from the National Sheriffs’ Association, Fraternal Order of Police, National District Attorneys’ Association, and federal agencies.

Discussions will focus on Section 604, also known as the Blockchain Regulatory Certainty Act. The provision seeks to clarify that non-custodial software developers are not responsible for third-party misuse of their code unless they intentionally support illegal activity.

Some law enforcement groups fear the language could complicate efforts to pursue criminals operating through blockchain networks. Administration officials plan to argue that existing enforcement tools would remain intact.

Support from law enforcement remains critical. Senators Mark Warner and Catherine Cortez Masto have indicated that unresolved enforcement concerns could affect support for the legislation.

Meanwhile, the House Ways and Means Committee turned its attention to crypto taxes. During a hearing Tuesday, lawmakers reviewed six Republican-backed bills and a discussion draft covering digital asset taxation.

The proposals address mining rewards, staking income, reporting requirements, crypto donations, tax treatment parity, and disclosure programs. Industry participants welcomed several measures but noted the absence of a de minimis exemption for small Bitcoin transactions.

With only 31 Senate session days remaining before the August recess, lawmakers face increasing pressure to resolve both regulatory and tax issues tied to the broader crypto framework.

Crypto caught a modest bid on Thursday after Wednesday’s inflation report showed underlying price pressures staying contained. Bitcoin rose about 1.9% over 24 hours to roughly $62,600, leading the majors, per CoinDesk data.

Headline inflation rose 0.5% on the month and 4.2% over the year, the fastest annual pace since April 2023, but energy did most of the work, climbing 3.9% on the month and accounting for more than 60% of the increase as oil rose on the Iran conflict.

Core inflation, which strips out food and energy and is the gauge the Federal Reserve leans on, rose just 0.2% on the month, below the 0.3% forecast, and 2.9% over the year.

The bounce is shallow and concentrated in bitcoin. BTC is down less than 1% over the past seven days, holding its 200-week average, while the rest of the top tokens remain deep in the red on the week. Ether is off about 6.5% at roughly $1,651, XRP down 7.5% near $1.12, Solana down 7.4% around $65, and dogecoin off 7%. BNB held up better at a 2.1% weekly loss.

Traders now await Fed’s June 17 meeting, where markets expect no change to rates. The hot headline gives hawks cover to stay restrictive, while the soft core gives doves room to argue the pressure is narrow and energy-driven.

Another widely-cited catalyst is the public offering of Elon Musk-owned satellite, rockets and AI company SpaceX, which prices later Thursday and is expected to start trading on Friday at a $1.8 trillion valuation.

Shares for the company are already four times oversubscribed, with some singular entities bidding as much as $10 billion for the stock, per Bloomberg.

TLDR

• Anchorage submitted a public comment letter supporting Treasury’s GENIUS AML proposal.
• The firm backed classifying stablecoin issuers as financial institutions under the Bank Secrecy Act.
• Anchorage urged clarity on secondary-market sanctions liability tied to smart contract transactions.
• It argued issuers should not face strict liability for unknown sanctioned users on open networks.
• The proposal was issued jointly by FinCEN and the Office of Foreign Assets Control.

Anchorage Digital has backed the US Treasury’s proposed GENIUS AML framework while urging targeted clarifications. The federally chartered crypto bank submitted a public comment letter supporting core compliance provisions. However, it asked regulators to refine secondary-market sanctions exposure and enterprise-wide AML expectations.

Anchorage and GENIUS AML Framework Alignment

Anchorage stated that Treasury’s proposal places AML duties on regulated stablecoin issuers in a workable manner. The firm said the structure balances compliance standards with operational certainty for issuers. It added that clear rules will support payment innovation while maintaining oversight under existing law.

The letter responded to rules issued in April by the Treasury and the Financial Crimes Enforcement Network. The proposal would classify payment stablecoin issuers as financial institutions under the Bank Secrecy Act. As a result, issuers would face AML, customer due diligence, and suspicious activity reporting obligations.

Treasury’s Office of Foreign Assets Control joined FinCEN in issuing the proposed rule. The framework would align stablecoin issuers with US sanctions compliance standards. It would also impose enhanced monitoring and recordkeeping duties across issuer operations.

Anchorage wrote that “a final rule that is clear and workable gives regulated institutions the certainty they need to build.”

The firm said such clarity strengthens US leadership in payments and settlement infrastructure. It therefore endorsed the proposal’s general direction while requesting precise adjustments.

Secondary-Market Sanctions and Compliance Scope

Anchorage urged Treasury to clarify liability tied to secondary-market transactions on public blockchains. It argued that issuers should not bear strict liability for unknown sanctioned users. The firm said smart contract interactions may occur without issuer knowledge or direct customer relationships.

Anchorage stated that issuers cannot independently identify all sanctioned actors transacting through open networks. It therefore asked regulators to define limits around secondary-market sanctions exposure. The letter also sought guidance on enterprise-wide AML programs and correspondent account requirements.

The firm requested clarity on how AML obligations apply across affiliated entities. It asked Treasury to outline expectations for correspondent relationships under the proposed framework. According to the letter, defined boundaries would reduce uncertainty for regulated institutions.

Support for the GENIUS AML proposal has varied across the crypto industry. Hyperliquid and Paradigm also submitted a joint comment letter addressing similar concerns. However, they expressed a more critical view of the sanctions perimeter.

The groups argued that OFAC’s draft language extends issuer liability beyond practical visibility. They said the framework treats smart contract use as an ongoing service provision.

“OFAC sweeps secondary market activity into the issuer’s compliance perimeter,” the letter stated.

They added that the draft could impose sanctions duties without direct user relationships. The comment letter said issuers may lack visibility into parties transacting on secondary markets. Treasury has not yet issued a final rule following the April proposal.