U.S. President Donald Trump has reportedly approved an ethics provision in the Digital Asset Market Clarity Act, commonly known as the CLARITY Act. The agreement removes one of the biggest political obstacles that had delayed the Senate’s consideration of comprehensive crypto market structure legislation for several months.

According to a report from The Block published on Monday, July 20, 2026, an industry source said an agreement on the ethics provision had been reached following lengthy negotiations between the White House and lawmakers. The provision is expected to prevent federal officials, including the president, vice president, and members of Congress, from using their positions to profit from digital assets.

However, the final text of the bill has not yet been published. As a result, the specific types of crypto ownership, transactions, or activities that would be prohibited remain unclear.

Ethics Provision Became the Final Obstacle for the CLARITY Act

Discussions surrounding the ethics provision intensified after several Democratic senators raised concerns about potential conflicts of interest between government policy and crypto businesses connected to the Trump family.

The debate primarily focused on the Trump family’s involvement in the Official Trump (TRUMP) memecoin and the decentralized finance project World Liberty Financial. Trump’s previous financial disclosures also showed income generated from activities related to World Liberty Financial.

On July 16, 2026, Trump met with Senator Bernie Moreno, Senator Cynthia Lummis, and White House crypto adviser Patrick Witt to discuss the provision. Although no agreement was reached during the meeting, Trump reportedly approved the measure several days later.

The ethics provision had previously been one of the main demands from Democratic senators before they were willing to support the bill in a full Senate vote.

Senator Angela Alsobrooks, one of the Democrats who supported the CLARITY Act at the committee level, previously emphasized that her committee support did not guarantee the same vote when the bill reached the Senate floor. She called for ethics protections that would apply not only to the president and vice president, but also to all members of Congress.

The latest agreement could pave the way for the bipartisan support required to move the CLARITY Act to the next stage of the legislative process.

CLARITY Act Defines the Regulatory Authority of the SEC and CFTC

The CLARITY Act is designed to establish a more comprehensive federal regulatory framework for the U.S. digital asset industry. One of its main objectives is to clarify the division of authority between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Under the proposed framework, the CFTC would gain broader authority over spot markets for digital assets classified as commodities. Meanwhile, the SEC would continue overseeing digital assets and fundraising activities that meet the legal definition of securities.

According to the Senate Banking Committee, the bill would introduce disclosure requirements for digital asset projects, preserve regulators’ authority to address fraud, and restrict the misuse of information by insiders.

The CLARITY Act also includes several other provisions, including:

• anti-money laundering compliance requirements for exchanges, brokers, and digital commodity dealers;
• rules governing stablecoin yields or rewards;
• certain registration exemptions for crypto projects raising capital;
• criteria for determining whether a DeFi protocol is genuinely decentralized; and
• a provision stating that tokenizing stocks or bonds does not change the legal status of the underlying assets.

Under an earlier version of the bill, crypto companies could raise up to US$50 million annually and a maximum of US$200 million in total through certain mechanisms without completing the full SEC registration process.

Senate Faces Deadline Before August Recess

The U.S. Senate Banking Committee advanced the CLARITY Act in a 15–9 vote on May 14, 2026. All Republican members supported the bill, along with two Democratic senators, Ruben Gallego and Angela Alsobrooks.

Following Trump’s approval of the ethics provision, an updated version of the bill is expected to be released within days. The Senate could then schedule debate and a vote before entering its recess period.

The available time is relatively limited. The Senate’s official schedule shows that the state work period is set to begin on August 10 and continue through September 11, 2026. A source who spoke with The Block said the vote would need to take place no later than the first week of August.

If the Senate approves the updated version of the CLARITY Act, the bill will need to return to the House of Representatives because the Senate version contains changes from the text previously approved by the House.

The U.S. House passed the initial version of H.R. 3633 on July 17, 2025, by a vote of 294–134. A total of 78 Democrats supported the bill alongside all Republicans who voted in favor.

Once the House approves the Senate’s changes, the bill can be sent to Trump to be signed into law.

Impact on the U.S. Crypto Industry and Market

Approval of the ethics provision does not guarantee that the CLARITY Act will become law. The Senate still needs to secure bipartisan support, resolve differences between committee provisions, and obtain approval from the House once again.

Beyond the ethics issue, several senators have continued to raise concerns about anti-money laundering requirements and the treatment of DeFi protocols. Minority staff on the Senate Banking Committee previously argued that the bill still contained loopholes that could be exploited to evade sanctions and transaction-monitoring requirements.

Traditional banking groups have also criticized the stablecoin reward provisions, arguing that they could encourage consumers to move deposits from banks to digital asset platforms.

Nevertheless, progress on the CLARITY Act is still considered important for crypto companies such as Coinbase, Kraken, and Circle, as well as blockchain developers and token issuers operating in the United States.

A clearer division of authority between the SEC and CFTC could reduce the legal uncertainty that has long created obstacles for product launches, token trading, and the participation of financial institutions.