Clarity Act Update: Ban Federal Officials From Crypto Profits

Senate Republicans released an updated Digital Asset Market Clarity Act (“Clarity Act”) with new crypto ethics rules aimed at banning federal officials from profiting from digital assets while in office. The proposal, negotiated between the White House and Republicans without apparent Democratic input, would bar the President, Vice President, members of Congress, federal judges, and their spouses from issuing or sponsoring digital assets for compensation. Existing holdings would have to be sold or placed into a blind trust officials cannot control. Key enforcement and disclosure provisions also take shape. The draft would give the Department of Justice civil enforcement authority, including the ability to sue exchanges that knowingly list tokens tied to banned officials. Exchange penalties could reach $250,000 per violation, per day. Individual violations could trigger disgorgement plus a civil fine equal to 10% of compensation received or $500,000. Officials would also face tighter reporting, including crypto sales above $1,000. Separately, the bill keeps several earlier sections from the Senate Banking Committee version, including protections for non-custodial developers from being classified as money transmitters, self-custody rights (“Keep Your Coins”), stablecoin framework language, and added funding for state/local investigations plus blockchain analytics and a cyber center focused on threats tied to North Korea and Iran. The Clarity Act ethics ban includes a sunset date of January 20, 2029, and the bill states it does not replace existing conflict-of-interest, securities, or anti-fraud laws. The rules are expected to take effect about 360 days after enactment or after final implementing guidance.