WASHINGTON / RankWire.AI / – Democracy Defenders Action and Transparency International U.S., both ethics watchdogs, urged Congress to implement strict anti-corruption measures in upcoming cryptocurrency legislation or to completely reject the CLARITY Act. In their joint statement, these nonpartisan groups criticized the proposed Digital Asset Market Clarity Act, warning that its current language leaves significant loopholes. They stressed that without firm restrictions on self-dealing by public officials, the bill fails to protect American consumers, maintain economic stability, or safeguard the broader crypto sector.
Legal experts from both organizations pointed out that the ethics provisions in the Senate draft are narrowly drafted and contain major exemptions. The groups noted that the draft grandfathered in existing cryptocurrency holdings and financial arrangements, while lacking strong enforcement mechanisms. They argued that this language effectively shields pre-existing business ventures from federal oversight. To achieve meaningful reform, the watchdogs called for a blanket prohibition preventing all covered government officials from holding direct financial interests, trading digital assets, or earning income from existing licensing and profit-sharing arrangements.
The coalition specified essential policy steps to prevent public officials from exploiting federal oversight of digital assets for personal profit. The ethics standards proposed require officials and their immediate family members, including spouses and dependent children, to divest from all digital asset holdings outside diversified registered investment funds. They also called for strict rules to prevent adult children of public officials from leveraging family ties or proximity to power for commercial crypto ventures. Additionally, full financial disclosures must cover all digital asset transactions—buying, selling, or transferring—regardless of compensation.
Senate CLARITY Act Language Under Fire for Potential Loopholes
Regarding enforcement, the groups emphasized the need for independent authority to uphold ethics rules beyond a president’s term. They urged Congress to empower the Attorney General with investigatory powers under an extended statute of limitations, and to enable private individuals and state attorneys general to seek legal remedies for misconduct. Virginia Canter, chief counsel and director of ethics and anti-corruption at Democracy Defenders Action, warned that ethics legislation without independent enforcement is essentially a green light for corruption. She urged Congress to impose a complete ban on digital asset interests for officials and their families.
Policy experts highlighted that the broader debate over the CLARITY Act revolves around defining regulatory jurisdiction over digital assets. While the legislation aims to clarify rules between federal market regulators and shift away from enforcement-heavy approaches, ethics advocates stress that public trust depends on clear boundaries separating regulation from private financial interests. Scott Greytak, deputy executive director at Transparency International U.S., pointed out that the public expects officials to choose whether to regulate an industry or profit from it, emphasizing that lawmakers must close crypto conflict of interest loopholes or scrap the CLARITY Act to preserve government integrity.
Calls Grow for Removing Grandfathering Provisions on Existing Investments
As the Senate reviews the bill text, increasing pressure is mounting from ethics groups to resolve conflicts of interest safeguards. Experts warn that exempting pre-existing commercial relationships sets a dangerous precedent for federal ethics enforcement in emerging financial sectors. Representatives from both advocacy organizations reiterated that eliminating these exemptions is essential to restoring public trust in federal oversight of markets.
The future of the CLARITY Act hinges on whether committee negotiators incorporate binding ethics provisions before a final floor vote. Congressional aides reported ongoing bipartisan discussions about possible amendments to strengthen enforcement. Ethics advocates caution that passing the bill without comprehensive restrictions on conflicts of interest could undermine regulatory credibility and sustain problematic relationships within the federal government.