Democrats want a conflict of interest provision in crypto bill
The US Senate Agriculture Committee advanced legislation last week that will create broad regulations for the crypto industry in the United States, but did so with only Republican support.
During the committee hearing, Democratic senators pushed for a provision that would address potential conflicts of interest in order to prevent politicians from profiting off their crypto holdings while the federal government is also regulating the markets.
The Democrats are especially concerned about the growing crypto empire that the Trump family is building while President Trump currently occupies the White House.
The legislation, known as the CLARITY Act, is aiming to create a regulatory framework around the country's broader crypto market infrastructure, joining the GENIUS Act which was passed in June, and became the first legislation regulating stablecoins in the US.
The Senate Agriculture Committee oversees the Commodity Futures Trading Commission (CFTC), which is being given regulatory authority over spot crypto markets, rather than the Securities and Exchange Commission (SEC).
The CLARITY Act would need to pass out of the Senate Banking Committee before it can be brought for a vote before the full chamber, making support from the Democrats crucial. And while the crypto legislation has fairly broad bipartisan support, the Trump family's increasing involvement in the industry is complicating passage of the bill
“The White House has made this infinitely harder,” said Sen. Cory Booker, a Democrat from New Jersey, who is leading his party in the crypto legislation negotiations. “This is ridiculous that the President of the United States and his family have made billions of dollars off this industry and are still trying to create a framework here without the kind of ethics that would prevent this kind of gross corruption in our country that would undermine our nation’s democracy.”
Bartlett Naylor, economist for watchdog group Public Citizen, backed the Democrats' opposition in a statement.
“Leading Democrats correctly rejected this latest effort to sanitize President Trump’s massive crypto grift, recognized by the nation’s leading ethics experts as the most massive corruption in presidential history," he said. "This ‘gryfto’ bill contains no presidential conflict standards.
"Further, it wraps these sprawling Ponzi cryptocurrency schemes with the imprimatur of the U.S. government, allowing hucksters to affix the label of the CFTC to their scams."
Coinbase thanks committee but still opposes the bill
And of course, it's not just lawmakers who are opposing the legislation's current draft.
Although Faryar Shirzad, chief policy officer for Coinbase, thanked the Senate Agriculture Committee for advancing the legislation in a post on X, saying that it "has just taken one enormous step forward in making the US the leader in digital innovation," Coinbase pulled its support for the legislation a day before the Senate Banking Committee was set to vote on it.
Coinbase CEO Armstrong said that there were "too many issues" with the draft of the bill as written, but pointed to four main objections, including "amendments that would kill rewards on stablecoins, allowing banks to ban their competition."
It does not appear that any of the concerns Armstrong raised have been addressed, which means Coinbase would likely still not support it when it comes up for a vote again in the Senate Banking Committee.
Senate Banking Committee Chair Tim Scott decided to delay the vote after Coinbase pulled its support, and another meeting has not been rescheduled.
Armstrong has put himself at the center of a dispute with the banking industry about how the crypto markets should be regulated, as the Wall Street Journal reported last week.
“It’s now seen more as Coinbase vs. the banks rather than crypto vs. the banks,” said Ron Hammond, head of policy and advocacy at digital assets trading firm Wintermute, told the Journal.
Democrats do appear intent on getting the CLARITY Act across the finish line, but it remains to be seen whether Republicans will be willing to curb Trump's ability to profit off the crypto industry while he's still occupying the White House.