US Cryptocurrency Bill Stalled by 'Ethics Clause'...Will It Pass if Trump's Virtual Asset Business is Blocked?

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An ethics clause has emerged as a key variable in Senate negotiations surrounding the passage of the U.S. cryptocurrency market structure bill. U.S. Democratic Senator Kirsten Gillibrand stated that an ethics clause, which limits the involvement of public officials and their families in virtual asset businesses, must be included in the bill to gain bipartisan support.

CoinGape reported on May 6 that Gillibrand said at the Consensus Miami event that the U.S. cryptocurrency market structure bill would pass if it included an ethics clause. Gillibrand explained that this clause has become the biggest issue ahead of the potential bill review process.

Democratic senators are pushing for an ethics clause to restrict the virtual asset-related businesses of U.S. President Donald Trump. This clause could prohibit high-ranking elected officials and their families from actively engaging in virtual asset businesses. CoinGape reported that Senator Adam Schiff, who is leading the Senate Democratic negotiations, previously stated that progress was being made towards including this clause in the U.S. cryptocurrency market structure bill.

However, the ethics clause is outside the jurisdiction of the Senate Banking Committee. Consequently, the Banking Committee can proceed with the bill review process without this clause. However, Democratic members of the committee have signaled that it would be difficult for them to vote in favor of the bill's advancement without an agreement on including the ethics clause.

Beyond the ethics clause, the U.S. cryptocurrency market structure bill faces difficulties surrounding the stablecoin yield language. The banking sector is protesting that the current language does not sufficiently prevent the risk of deposit outflows. Senator Thom Tillis and Senator Angela Alsobrooks, who mediated the agreement, maintained that the agreement was final despite the banking sector's objections.

Gillibrand presented consumer protection and safeguards against illicit finance and terrorist financing as additional issues to be resolved before the bill review process. Law enforcement agencies and the virtual asset industry are clashing over decentralized finance provisions related to illicit finance. Law enforcement agencies argue that these provisions, which protect virtual asset software developers, make it difficult to crack down on illicit finance.

Senator Cynthia Lummis stated that related negotiations are underway and an agreement could be reached soon. Gillibrand predicted that if things go well, the U.S. cryptocurrency market structure bill could pass in August. Senator Bernie Moreno suggested an even faster timeline, mentioning that Trump could sign the bill by July.

The U.S. cryptocurrency market structure bill faces an August deadline. This is because the Senate will go into a five-week recess before the midterm elections. Lummis warned that if the bill is not passed now, it could be delayed until 2029. The ethics clause, stablecoin yield language, consumer protection, and illicit finance prevention clauses remain the final sticking points in the bill's processing.

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