A fragile compromise on stablecoin rules pushed the CLARITY Act closer to a key Senate vote, but a new ethics fight over the $1 billion Trump crypto portfolio now threatens to kill the bill entirely.
A fragile compromise on stablecoin rules pushed the CLARITY Act closer to a key Senate vote, but a new ethics fight over the $1 billion Trump crypto portfolio now threatens to kill the bill entirely.

The primary US crypto regulation bill faces a make-or-break Senate test this month after a key Republican senator threatened to block the legislation over an ethics dispute, jeopardizing a fragile compromise reached on stablecoin rewards just last week.
"There has to be ethics language in the bill before it leaves the Senate, or I’ll go from one of the people working on negotiating it to voting against it," retiring Senator Thom Tillis said, putting him at odds with the White House and crypto firms like Coinbase that are pushing for a vote before the 2026 election calendar closes the legislative window.
The ultimatum from Tillis targets Democratic demands for rules restricting federal officials from promoting cryptocurrencies, a direct response to the Trump family’s more than $1 billion in crypto ventures. This new fight emerged just as Senate negotiators released compromise language to resolve a months-long stalemate with the banking lobby over stablecoin rewards, a breakthrough that had put the CLARITY Act on track for a committee markup as soon as the week of May 11.
With Polymarket odds on the bill’s 2026 passage already down to 46 percent from 65 percent in January, the timeline is now critical. Failure to advance the bill past the committee in May could push comprehensive market-structure legislation into 2030, according to Senator Cynthia Lummis, leaving the jurisdictional clash between the SEC and CFTC unresolved and a proposed crypto wash-sale tax rule in limbo.
The bill’s recent momentum came after a breakthrough on stablecoin rewards. The original draft stalled in January amid fierce opposition from the banking industry, which argued that yield-bearing stablecoins would function like unregulated interest-bearing deposits, pulling capital away from traditional lenders. The American Bankers Association (ABA), representing over 3,000 banks, has continued to lobby aggressively against any proposal that allows for yield.
The new compromise language, brokered by Senators Tillis and Angela Alsobrooks, offers stronger prohibitions on products that are "economically or functionally equivalent to interest on a bank deposit." The move was enough to win back support from key industry players.
“We protected what matters – the ability for Americans to earn rewards, based on real usage of crypto platforms and networks,” Faryar Shirzad, Coinbase’s chief policy officer, said in response to the new text.
The optimism was short-lived. The focus has now shifted to an ethics provision aimed at the Trump family’s crypto activities, including the World Liberty Financial project and its USD1 stablecoin. Democrats, led by Senator Adam Schiff, are demanding a ban on all federal employees, including the president, from sponsoring, endorsing, or issuing digital assets.
Tillis’s opposition to passing the bill without this language creates a significant hurdle. As a retiring member of the Senate Banking Committee, his vote is crucial, and his threat to switch from a negotiator to a "no" vote could fracture Republican support. The committee lacks jurisdiction over ethics, meaning the language must be added outside the normal markup process, further complicating the bill's path to the Senate floor.
The White House, meanwhile, is applying pressure from multiple angles. Treasury Secretary Scott Bessent and White House crypto adviser Patrick Witt are actively backing the bill. Witt is scheduled to close the HederaCon 2026 conference with a fireside chat on the CLARITY Act, signaling the administration's continued push. The administration’s 2026 budget also includes several crypto tax proposals, including applying wash sale rules to digital assets, which the Treasury estimates would generate $5.4 billion in revenue over 10 years.
This article is for informational purposes only and does not constitute investment advice.