CLARITY Act Fight: Trump Crypto Adviser Rejects Developer Proposal
Law enforcement-backed Democrats have proposed changes to the CLARITY Act to make it easier to prosecute some crypto software developers. The dispute centers on whether developers should face criminal liability for crimes enabled through the software they build.
Trump’s crypto adviser, Patrick Witt, rejected the latest draft, saying White House and Treasury talks were not “productive negotiations” as claimed. He told Sen. Catherine Cortez Masto that the newest revisions are “not even close” to what the administration wants.
Politico reports two major U.S. prosecutor groups submitted fresh CLARITY Act language aimed at breaking months of deadlock. The update also targets the Blockchain Regulatory Certainty Act (BRCA), removing parts that could have offered developers protection from criminal prosecution in some cases.
The White House argues authorities should protect builders who do not hold customer funds to encourage innovation. Critics, including New York Attorney General Letitia James, warn the current approach could weaken state enforcement and allow crypto fraud to go unchecked.
Not all stakeholders oppose the bill: the Fraternal Order of Police withdrew objections and backed the CLARITY Act after previously raising concerns about BRCA. Additional support reportedly comes from law enforcement-related groups, and over 160 former national security and intelligence officials endorsed the bill, citing stronger tools against illicit finance.
For traders, the CLARITY Act debate signals ongoing regulatory uncertainty around developer accountability—an issue that can shift compliance expectations and risk pricing for crypto-related firms.
Neutral
The news is primarily about U.S. legislative drafting and political negotiation around the CLARITY Act and BRCA, not about an immediate enforcement action or a change in token rules. That usually limits direct, one-day price impact.
However, the direction of the debate matters. Removing or narrowing protections for developers under BRCA can increase perceived legal/compliance risk for crypto software and infrastructure firms. Historically, similar U.S. regulatory push-and-pull periods tend to create “headline volatility”: market participants price uncertainty, prefer reduced risk, and rotate between majors and higher-quality liquidity.
In the short term, traders may expect choppy sentiment because two sides are still publicly disagreeing (White House vs. law enforcement/prosecutor groups; AG Letitia James vs. police-backed support). In the long term, if the CLARITY Act meaningfully tightens liability frameworks, compliance costs and legal clarity could improve for some actors while harming others—supporting a more stable but more selective market structure.