WASHINGTON — Senate Democrats protected Americans Tuesday from the danger of President Trump profiting from cryptocurrency by blocking consideration of legislation that would have imposed new restrictions on President Trump profiting from cryptocurrency.
The CLARITY Act received 50 votes but failed to reach the 60 required to advance after Democrats, joined by four Republicans, objected that its ethics provisions remained inadequate given Trump’s extensive financial interests in crypto. The bill would have established a broad federal regulatory framework for digital assets while imposing new restrictions on public officials’ crypto activities.
Fortunately, Congress has once again discovered the safest response to an insufficient rule is no rule.
The final Republican draft followed more than a year of negotiations and, according to its sponsors, incorporated 126 substantive changes requested by Democrats, including tougher ethics provisions.
Democrats argued loopholes still remained. Among their objections: the rules did not require complete divestiture and still left significant enforcement authority with officials appointed by Trump.
All reasonable subjects for further negotiation, which Congress addressed using its traditional method for improving an imperfect law: killing it and restoring the less restrictive status quo.
Sen. Ruben Gallego, one of the principal Democratic negotiators, argued Republicans had ended negotiations before agreeing to sufficiently strong protections. He brought unusual experience to the subject of crypto money entering politics: the crypto-focused Protect Progress super PAC spent $10,039,655 independently supporting Gallego’s successful 2024 Senate campaign.
The spending was independent of Gallego’s campaign, an important legal distinction meaning the crypto industry was allowed to spend $10 million helping elect him so long as nobody from his campaign helped choose the font.
Gallego then helped negotiate ethics rules governing an industry whose political apparatus had spent millions supporting his election, before voting against advancing legislation containing much of that compromise because the restrictions on crypto money and political conflicts were not restrictive enough.
Washington had therefore completed the full regulatory cycle: crypto money helped elect a senator, the senator helped write rules restricting crypto money in politics, and then voted against those rules because they did not restrict crypto money in politics enough.
Democrats seeking a more ethical model for politically adjacent cryptocurrency did at least have one readily available.
Six days before the vote, former President Biden’s son Hunter—who holds no public office and therefore enjoys the considerable ethical advantage of not actually regulating anything—launched the $LAPTOP memecoin after criticizing Trump’s $TRUMP token as a “grift.” $LAPTOP publicly disclosed its allocations, placed founder tokens under lockup rules and earmarked 20% of supply for community airdrops that included wallets that had lost money on $TRUMP.
It then lost roughly 98% of its value in under an hour.
This was an important demonstration that crypto investors can still lose nearly everything ethically.
Unlike Trump’s arrangement, there was no need to wonder whether presidential power was enriching the token issuer. Investors could simply watch their money disappear under the reassuring supervision of a private citizen.
Washington had finally found the gold standard for political crypto: same memecoin, same collapse, dramatically improved conflict-of-interest disclosures.
Democrats maintain they still want crypto regulation—just with stronger safeguards against politicians financially benefiting from the industry they regulate. For now, however, Congress has failed to enact a comprehensive statutory framework, leaving significant near-term rulemaking with the SEC and CFTC under the Trump administration and making those rules more vulnerable to future political reversal.
Trump has therefore been spared the indignity of operating under inadequate new restrictions.
He can continue operating under the old ones.
Which are fewer.
Inspired by:
