Tillis and Gallego send White House new CLARITY Act ethics plan with state enforcement

Republican Sen. Thom Tillis and Democratic Sen. Ruben Gallego have submitted a revised CLARITY Act ethics proposal to the White House that would let state authorities, not just the U.S. Attorney General, enforce restrictions on federal officials issuing or sponsoring digital tokens, Punchbowl News reported Thursday.

According to Punchbowl News, the counterproposal has been presented to the White House as lawmakers work to secure enough votes before Congress breaks for its August recess. The timing is critical, with supporters arguing that the United States needs clear digital asset regulations to remain globally competitive while strengthening public confidence in government oversight.

Senate revises ethics enforcement to address Democratic concerns

The latest Clarity Act ethics proposal represents a significant shift from earlier negotiations. Previous drafts reportedly gave exclusive enforcement authority to the U.S. Attorney General, a provision that drew criticism from Senate Democrats concerned that oversight would remain entirely within the executive branch.

By empowering state authorities to enforce restrictions on federal officials’ crypto-related activities, negotiators hope to create a more independent accountability framework. The revised language would specifically enable state officials to pursue violations involving federal officeholders who issue or promote digital tokens, according to reports.

The issue has remained one of the most contentious elements of negotiations despite broader progress on the crypto market structure legislation.

On July 22, the White House announced that it had accepted what it described as the strongest federal ethics restrictions ever proposed during negotiations with Republican Sens. Cynthia Lummis of Wyoming and Bernie Moreno of Ohio. However, administration officials did not publicly release the final enforcement language or explain how the provisions would be implemented, leaving several questions unanswered.

Some Democratic lawmakers argued that relying solely on the Department of Justice could undermine independent oversight because the department operates under the executive branch. Barron’s previously reported that several lawmakers favored allowing state attorneys general to share enforcement authority—an approach that closely aligns with the latest proposal.

Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, previously told CoinDesk that the administration supports ethics rules applying broadly across the federal government while opposing provisions targeting a specific officeholder or family.

Bipartisan support hinges on stronger safeguards

Winning Democratic backing remains essential for the legislation’s future, making the revised Clarity Act ethics language one of the bill’s most closely watched components.

Sen. Ruben Gallego has repeatedly argued that stronger protections are necessary before enough Democrats can support the legislation. He has maintained that improvements are still needed across several areas, including ethics, consumer protection, illicit finance safeguards, market integrity, and conflicts of interest.

“We must strengthen protections around ethics, consumer protection, illicit finance, conflicts of interest and market integrity,” Gallego previously said while emphasizing that negotiations with Republicans would continue to move the legislation toward final passage.

Many Senate Democrats have also expressed concern that the bill should not leave room for potential conflicts involving President Donald Trump and the cryptocurrency industry, given his administration’s regulatory role. Their concerns have focused on Trump’s memecoin project and his family’s involvement with World Liberty Financial, arguing that stronger safeguards are necessary to preserve public trust.

Republicans currently hold an effective 52-47 Senate majority due to the continued medical absence of Sen. Mitch McConnell. Nevertheless, advancing most legislation still requires 60 votes, meaning bipartisan cooperation remains indispensable.

Political analysts say the revised enforcement language could become a key compromise if it satisfies Democratic concerns without significantly altering the broader objectives of the legislation.

White House and treasury face growing pressure before August recess

The race to finalize the Clarity Act ethics package has intensified as lawmakers approach the August congressional recess.

Treasury Secretary Scott Bessent has publicly urged senators to vote on the CLARITY Act before leaving Washington, arguing that lawmakers should make their positions on crypto market regulation clear.

Bessent has also defended the Blockchain Regulatory Certainty Act, saying the proposal would formally codify longstanding Treasury policy regarding non-custodial software developers rather than weaken anti-money laundering safeguards.

His comments came after several law enforcement organizations, including the National Fraternal Order of Police and the Major Cities Chiefs Association, voiced support for revised language following earlier concerns about potential enforcement gaps.

Supporters argue that passing both measures would provide long-awaited regulatory certainty for the digital asset industry while establishing clearer compliance standards for businesses operating in the United States.

Final negotiations could shape the future of U.S. crypto regulation

The House of Representatives approved its version of the CLARITY Act in July 2025 with bipartisan support, marking an important milestone for one of the most significant cryptocurrency regulatory efforts in recent years.

However, Senate negotiators must still finalize the Clarity Act ethics provisions before the legislation can move forward. Whether the revised enforcement proposal ultimately secures enough Democratic votes may determine the fate of the broader crypto market structure bill.

The outcome is being closely watched across the cryptocurrency industry, where exchanges, developers, investors, and policymakers have long called for comprehensive federal rules governing digital assets.

As negotiations continue, the Clarity Act ethics debate has evolved into more than a disagreement over enforcement authority. It has become a broader test of whether Congress can build bipartisan consensus around ethical safeguards while delivering the regulatory clarity that many industry participants say is essential for innovation and investor protection.

With only a narrow legislative window remaining before the August recess, the coming days are expected to determine whether lawmakers can bridge their remaining differences and advance one of the most consequential pieces of crypto legislation currently before Congress.