Senate Punts Crypto Bill, But Regulation Fight Likely Before Midterms

The debate over the industry’s future will play out in the midterms, where campaign donations are mostly expected to benefit Republicans.

Sen. Lummis

Sen. Cynthia Lummis has been a key player in bipartisan negotiations over a cryptocurrency bill. Francis Chung/POLITICO via AP Images Francis Chung/POLITICO/AP

The Senate punted a vote on cryptocurrency legislation until after its five-week summer recess, increasing the odds that Congress will fail to regulate a growing market impacting the U.S. economy.

The bill, known as the CLARITY Act, is backed by many crypto interests, and was approved in a bipartisan vote by the House more than a year ago. The legislation would establish a framework for regulating cryptocurrencies, making it easier for digital assets to integrate with the existing U.S. financial system.

Sen. Thom Tillis (R-North Carolina), one of the key negotiators on the legislation, told reporters on Friday that the bill’s prospects “probably dropped 50%,” after it was kicked to September.

Sen. Cynthia Lummis (R-Wyoming), who led negotiations on the bill, which overhauls a wide range of federal financial regulations to incorporate crypto trading, repeatedly called for a vote on the measure ahead of the August recess.

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“We’ve added 300 pages to the bill, it’s doubled in size, we’ve given [Democrats] 100 amendments they wanted,” Lummis said. “It’s time to vote. They were never serious about the 11 months that we put into this.”

But Senate Democrats continue to oppose the bill because they say it fails to adequately limit federal officials from investing in crypto.

Democrats rejected the ethics provision presented in the most recent draft of the bill. That language banned some officials from all three branches of government from issuing, sponsoring or promoting new digital assets while in office but did not require they fully divest from cryptocurrency and limited enforcement to the Department of Justice. Democrats have pushed for state attorneys general to have a role in enforcing those restrictions. The White House has been involved in months of negotiations over the broader bill and the ethics provision.

A bipartisan group of senators worked to write stricter ethics guardrails but are still in talks with the White House, which will now shift into the fall. Democrats are concerned about President Donald Trump and his family’s stake in World Liberty Financial, a decentralized finance platform and stablecoin issuer that’s expected to receive a federal banking charter soon.

Trump’s most recent financial disclosure shows he made more than $1 billion in crypto earnings in 2025.

“There’s no bill, so far as I can tell. There is still no agreement that would prevent Donald Trump from making his next 1.4 billion dollars on crypto scams,” Massachusetts Sen. Elizabeth Warren, the top Democrat on the Senate Banking committee, said.

Sens. Angela Alsobrooks (D-Maryland) and Ruben Gallego (D-Arizona) joined Republicans to vote to advance the bill out of committee in May and have been involved in the negotiations around new restrictions. But both lawmakers said they will not support the bill on the Senate floor without a concrete ethics rule.

Alsobrooks said after a vote was postponed that talks will continue over the ethics provision and Democrats are still interested in “getting the CLARITY Act right.”

“It is so critical that we consider ethics; it’s what the American people expect of us,” Alsobrooks said. “We need this regulation to happen, so I support innovation and we have to have the kind of guardrails to make sure that we grow it responsibly.”

Democrats and an increasing number of Republicans have also expressed concerns about other parts of the legislation, including the crypto market’s impact on community banks and parts of the bill that absolve the businesses behind decentralized crypto platforms from having systems to stop money-laundering and other crimes.

The crypto industry had wanted Senate leadership to hold at least a procedural vote on the measure before the August recess in order to help direct some of its political spending ahead of the November elections, according to reporting by Semafor.

Fairshake, the leading crypto-aligned PAC, started the cycle with nearly $200 million cash on hand. But with Democrats blocking the legislation over the ethics provision, it’s unclear how crypto-affiliated groups might redirect their political spending.

“It’s probably a good guess that the money will go primarily to Republicans, but it’ll for sure go to pro-crypto candidates,” a source in the crypto industry who requested anonymity to discuss political talks told NOTUS, noting that cryptocurrency groups supported Sen. Elissa Slotkin (D-Michigan) and Gallego in their Senate bids.

The bill requires 60 votes to advance through the Senate, mandating some bipartisan support. Crypto-affiliated groups spent around $40 million to beat former Sen. Sherrod Brown (D-Ohio) in 2024 and are expected to spend heavily in this year’s Ohio, Michigan and Alabama Senate races and in other races across the country. Brown is challenging Sen. Jon Husted (R-Ohio) in his bid to return to the Senate this year.

“If [crypto-affiliated super PACs] get stuffed by the Senate, I think they’ll be, you know, I think all of those folks will have kind of gotten their answer as to who’s with them and who’s not in the midterms,” the source said.

Alsobrooks told NOTUS that Democrats have been working on crypto regulation all year and are not the ones blocking negotiations.

“Democrats have worked hard,” Alsobrooks said when asked if she is concerned about the possibility of crypto political donations benefiting Republicans. “If it fails because of ethics, it’s going to be because Republicans refused to take on this president and to put the kind of guardrails in place that American people demand.”

Sen. Angus King, an independent who caucuses with Democrats, echoed Alsobrooks, telling NOTUS that Democrats can’t settle for a bill that does not adequately regulate the industry in order to secure political donations.

“I think it is masquerading as legislation,” King said. “I’m just concerned that it’s a terrible piece of legislation that would be bad for the country and national security.”