WASHINGTON / RankWire.AI / – Democracy Defenders Action and Transparency International U.S., both ethics watchdogs, have urged Congress to implement strict anti-corruption measures in upcoming cryptocurrency legislation or to completely reject the CLARITY Act. In a joint declaration, these bipartisan groups criticized the ethical provisions within the proposed Digital Asset Market Clarity Act, highlighting significant loopholes that remain unaddressed. They emphasized that without firm bans on self-dealing by public officials, the legislation fails to protect American consumers, safeguard national economic stability, or secure the crypto marketplace.
Legal specialists from both organizations pointed out that the ethics language included in the Senate draft was narrowly framed and created substantial statutory exemptions. The advocacy groups noted that the draft allowed existing cryptocurrency holdings and financial arrangements to remain intact while lacking strong enforcement mechanisms. They argued that the legislative language effectively shields pre-existing commercial ventures from federal oversight. To enact meaningful reform, they called for a broad prohibition preventing all covered government officials from holding direct financial interests, engaging in digital asset trading, or earning income from pre-existing licensing and profit-sharing agreements.
The coalition outlined essential policy measures needed to prevent public officials from exploiting digital asset oversight for private financial gain. The proposed ethics standards specify that officials and their immediate family members—including spouses and dependent children—must divest from all digital asset holdings outside diversified registered investment funds. Additionally, the groups advocate for strict rules to prevent adult children of public officials from leveraging family connections or proximity to power to advance commercial crypto ventures. They also insisted that full financial disclosures should cover all acquisitions, sales, and transfers of digital assets, regardless of compensation.
Loopholes in Senate CLARITY Act Language Draw Concerns Over Enforcement
Regarding enforcement, the oversight groups stated that ethics regulations require independent administrative authority to remain effective beyond individual presidential terms. They urged Congress to empower the Attorney General with investigatory authority under an extended statute of limitations, while also allowing private individuals and state attorneys general to pursue legal remedies against misconduct. Virginia Canter, chief counsel and director of ethics and anti-corruption at Democracy Defenders Action, emphasized that ethics legislation lacking independent enforcement mechanisms effectively enable corruption, calling on Congress to adopt a complete ban on digital asset interests for officials and their families.
Economists and policy experts noted that the broader debate over the CLARITY Act revolves around defining regulatory jurisdiction over the digital asset industry. The legislation aims to clarify regulatory authority between federal market regulators, reversing prior enforcement-focused approaches. However, ethics advocates stress that maintaining public trust requires clear boundaries separating regulatory oversight from personal financial interests. Scott Greytak, deputy executive director at Transparency International U.S., argued that the public expects officials to choose between regulating an industry or profiting from it, warning that lawmakers must close crypto conflict of interest loopholes or cancel the CLARITY Act to uphold government integrity.
Call for Eliminating Grandfathering of Existing Cryptocurrency Investments
As the Senate reviews the bill, pressure from ethics organizations continues to mount on congressional leaders to address conflict-of-interest safeguards. Experts on oversight stress that exempting pre-existing commercial relationships sets a risky precedent for federal ethics enforcement across emerging financial sectors. Representatives from both advocacy groups reiterated that removing these exemptions is the minimum action needed to restore public confidence in federal market oversight.
The future progress of the CLARITY Act hinges on whether committee negotiators will incorporate binding ethics requirements before the final floor vote. Congressional aides report ongoing bipartisan discussions about potential amendments to strengthen enforcement mechanisms. Ethics advocates warn that passing the legislation without comprehensive prohibitions on conflicts of interest would erode regulatory credibility and sustain conflicts of interest across federal agencies.