The CLARITY Act Bans Officials From Crypto But Trump's Kids Are Off the Hook - EUROPE SAYS
The biggest crypto bill in US history just added ethics rules that are supposed to stop politicians from cashing in on the industry they regulate. But whether those rules actually have teeth is a different. . .
The biggest crypto bill in US history just added ethics rules that are supposed to stop politicians from cashing in on the industry they regulate. But whether those rules actually have teeth is a different question. Senate Republicansreleasedthe full 616-page CLARITY Act text on July 22, including a section titled “Ban on Certain Digital Asset Transactions. ” It bars the president, vice president, Congress members, federal judges, and other officials — plus their spouses — from issuing or sponsoring digital assets while in office. The ban expires January 20, 2029. Here’s the catch fueling the real fight: the bill doesn’t cover officials’ children. Trump’s $1. 4 Billion Crypto ProblemTo understand why the ethics clause matters, you need to see the money behind it. Trump’s 2025 financial disclosure listed roughly $1. 4 billion in crypto-related income — more than his real estate, golf courses, and licensing deals combined. About $635 million came from $TRUMP memecoin royalties, launched on Solana days before his January 2025 inauguration. World Liberty Financial, the DeFi (decentralized finance) platform co-founded by his sons, generated another $500 million-plus. We estimate the Trump family has pulled in at least $2. 3 billion from crypto ventures since he returned to the White House. Democrats have essentially said: we won’t vote for any crypto bill that lets the president keep earning from the industry he’s regulating. The Children LoopholeThe CLARITY Act’s ethics section covers “public officials and employees” and “their spouses. ” It does not mention children. All three of Trump’s sons involved in crypto — Don Jr. , Eric, and Barron — fall outside the ban. Don Jr. and Eric co-founded World Liberty Financial; two of them also launched American Bitcoin, a publicly traded mining company. Under the current draft, none of that would need to change. As Decryptnoted, the omission means the bill “may not deliver the full effect Democrats had hoped for. ” Senator Cynthia Lummis called the ethics package “the most comprehensive and wide-ranging ethics provision in history. ” But the restriction covers the person signing executive orders — not the family members running the crypto empire on his behalf. Five Loopholes Democrats Want ClosedElizabeth Warren’s staff on the Senate Banking Committee released a fact sheet on July 22 identifying five ways Trump could allegedly keep profiting:Existing ventures stay untouched. Income through intermediaries and licensing agreements tied to World Liberty Financial isn’t restricted. New ventures through relatives. A family member could launch a new crypto project without the president formally “issuing or sponsoring” it. Memecoin royalties continue. The $TRUMP token was issued before the ban would take effect, potentially grandfathering in ongoing royalties. Personal holdings stay. Trump could keep over $100 million in Bitcoin and other crypto he didn’t issue. DOJ-only enforcement. Trump’s own appointees would be responsible for policing him. Warren’s take: “This bill does nothing to prevent him from vacuuming up his next $1. 4 billion in crypto profits. ”The Enforcement DebateThe fight over who enforces the rules might matter more than the rules themselves. Under the current draft, the US Attorney General — a Trump appointee — would be solely responsible for policing violations. State attorneys general and private parties would be explicitly blocked. Senator Angela Alsobrooks called this arrangement unserious and said she’d vote against the bill if the DOJ remained the only enforcement option. There’s also a sunset clause: when the ban expires in 2029, the next DOJ would be barred from pursuing violations that occurred during Trump’s term. For a sector that’salready seen record-breaking security failuresin 2026, the question of enforcement isn’t abstract. If the only cop on the beat works for the person being policed, the conflict doesn’t disappear — it just gets laundered through better paperwork. What Else Is in the CLARITY Act?The ethics drama overshadows what would otherwise be landmark legislation. The CLARITY Act’s core purpose is answering a question crypto has asked for over a decade: is a token a security or a commodity?Digital commodities — think Bitcoin and potentially Ethereum — go to the CFTC (Commodity Futures Trading Commission). Investment contract assets stay with the SEC (Securities and Exchange Commission). The bill creates registration requirements for exchanges, brokers, and custodians, and sets a mature blockchain test to determine when a network is decentralized enough to shift from SEC to CFTC oversight. It also includes bankruptcy protections treating customer crypto as customer property — a direct response to the FTX collapse. And it builds out law enforcement tools: a cyber center targeting state-sponsored hackers from North Korea, who drained $577 million from DeFi protocols in April alone. Those provisions may be just as important as the market structure ones. But right now, nobody’s talking about them. Will It Actually Pass?The honest answer: it’s not looking great. Polymarketoddsfor the CLARITY Act becoming law in 2026 have cratered from above 70% to roughly 37%. The bill needs 60 Senate votes — meaning at least seven Democrats. As of July 23, seven Senate Democrats have publicly rejected the current draft. Senate Majority Leader John Thune told reporters on July 23 the bill will likely miss its pre-recess deadline. The Senate’s August recess starts around August 8, and floor time is being eaten by other priorities. If it dies before recess, the fallback is stripping key provisions and attaching them to a must-pass spending bill later — meaning watered-down rules and likely no ethics clause at all. The crypto industry’spush for regulatory clarityhas been building for years. The CLARITY Act is the closest thing to a finish line crypto has ever seen. But the bill that was supposed to bring order to crypto’s Wild West might be undone by something much older than blockchain: whether politicians should be allowed to profit from the industries they regulate. FAQsWhat is the GENIUS Act and how does it relate to the CLARITY Act?TheGENIUS Actis a separate law the Senate passed in June 2025, focused on stablecoin reserves, redemption, and compliance. The CLARITY Act builds on it by covering broader crypto market structure — token classification, exchange rules, and SEC/CFTC jurisdiction. How does the SEC vs CFTC jurisdiction split work for crypto?Digital commodities like Bitcoin go to the CFTC; tokens sold as investment contracts stay with the SEC. A mature blockchain test determines when a project is decentralized enough to shift from SEC to CFTC oversight. What happened with the Bybit hack and North Korea crypto theft?In February 2025, Bybit lost $1. 5 billion in the largest single exchange hack ever. The FBI tied it to North Korea’s Lazarus Group. The CLARITY Act includes a new cyber center designed to counter state-sponsored crypto theft. What are stablecoin yield restrictions in the CLARITY Act?The bill bans interest on idle stablecoin balances but allows rewards tied to activity like transactions or staking, as long as those rewards don’t function like bank deposit interest. How does the CLARITY Act protect crypto customers in bankruptcy?It treats customer digital assets as customer property — not part of a bankrupt company’s estate. This prevents a repeat of theFTX-style collapsewhere user funds were mixed with company assets.