Senate Punts "Clarity Act" Vote to September as Ethics, Divestiture Issues Snarl Talks

The U.S. Senate will not vote in August on the Clarity Act, a marquee proposal to establish a federal framework for crypto markets. The measure is now expected to come up in September, compressing an already tight legislative calendar before midterm campaigning takes over. Senate Majority Leader John Thune (R-SD) confirmed the shift, saying Democrats are "insistent on no Clarity vote" before the recess and that senators will "get that queued up first thing when we come back." He also credited sponsor Sen. Cynthia Lummis (R-WY) for her work on the bill. The delay raises the stakes because the Senate recess begins Friday, and lawmakers return in mid-September for only a few weeks — widely seen as the last viable window this year to move major legislation before the midterms reshape priorities. A source familiar with the matter told The Block that Democrats are wary of voting ahead of the midterms as crypto's political influence grows, and that the pause also buys time to line up the 60 votes needed to advance on the Senate floor. The Clarity Act cleared the Senate Banking Committee in May on a 15–9 vote. Only two Democrats — Reps. Ruben Gallego (D-AZ) and Angela Alsobrooks (D-MD) — supported it at that stage. To pass the full Senate, supporters would need roughly six more Democratic votes; Republican backing has also become less certain since the committee vote. The sticking points remain familiar: how the bill treats stablecoin reward mechanics, whether it gives law enforcement sufficient tools to fight illicit finance, and ethics language tied to President Donald Trump's crypto holdings — the most politically sensitive issue. On the ethics front, Sens. Thom Tillis (R-NC) and Ruben Gallego negotiated an addendum that has not been released publicly and is being coordinated with the White House. The proposal would require the president to divest from crypto-related businesses. Bloomberg reported that the structure of any forced divestiture could allow the president to defer federal capital gains taxes on those holdings — potentially for years — and possibly avoid the tax entirely if replacement investments are held until death. Without a deferral mechanism, Trump would face a 20% federal capital gains rate. Trump has reportedly disclosed $1.4 billion in crypto and memecoin earnings for 2025 and holds a 38% stake in World Liberty Financial through an affiliated company. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent have used the same deferral provision in their own divestments. The addendum would also allow state attorneys general to sue to enforce the ethics provisions if the Justice Department declines to act. Whether the president would accept the package remains unclear. Politically, Decrypt had previously reported that passage before the recess looked unlikely, and Galaxy Research in June cut the odds of enactment this year to roughly a coin flip. Industry groups criticized the delay but said they would keep pressing. Crypto Council for Innovation CEO Ji Hun Kim called the postponement disappointing and argued that each day without federal clarity "pushes American users and builders offshore and leaves consumers at risk." If Congress fails to act, SEC Chair Paul Atkins has indicated the agency could move ahead with crypto rules through rulemaking — an approach broadly opposed by the industry because agency rules can be reversed by a subsequent administration. For now, the Clarity Act is still in play but far from assured. With Democrats resisting a pre-recess vote and the ethics and tax questions unresolved, September is shaping up as the final high-stakes opportunity this year to advance the bill before the midterm cycle dominates Washington.