WASHINGTON / RankWire.AI / – Democracy Defenders Action and Transparency International U.S., both ethics watchdogs, are urging Congress to implement strict anti-corruption measures in upcoming cryptocurrency legislation or to abandon the crypto market provisions in the CLARITY Act entirely. In a joint statement, these nonpartisan groups criticized the ethical standards in the proposed Digital Asset Market Clarity Act, warning that its current language leaves significant loopholes open. They emphasized that without firm bans on self-dealing by public officials, the bill cannot adequately protect American consumers, the stability of the economy, or the broader crypto marketplace.
Legal specialists from both groups pointed out that the ethics provisions in the Senate draft are narrowly written and create key legal exceptions. They explained that the draft allows existing cryptocurrency holdings and financial arrangements to remain untouched, while lacking strong enforcement tools. The organizations argued that the language effectively shields pre-existing crypto ventures from federal oversight. To push for meaningful reform, they called for a full ban preventing all covered government officials from holding direct financial stakes, trading in digital assets, or earning income from prior licensing and profit-sharing agreements.
The coalition outlined essential policy steps needed to stop public officials from abusing digital asset oversight for personal financial gain. The suggested ethics rules 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 restrictions on adult children of officials, preventing them from using family ties or influence to promote commercial crypto ventures. Full disclosure of all digital asset transactions, including acquisitions, sales, and transfers, must be mandatory regardless of the payment received, they added.
Senate CLARITY Act Language Under Fire for Potential Loopholes
Regarding enforcement, the watchdogs stated that ethics rules require independent authority to remain effective beyond any single presidential term. They urged Congress to give the Attorney General investigative powers under a longer statute of limitations and to allow private entities and state attorneys general to pursue legal action against misconduct. Virginia Canter, chief counsel and director of ethics and anti-corruption at Democracy Defenders Action, said that ethics laws without independent enforcement simply enable corruption, and called for a complete ban on digital asset interests for officials and their families.
Policy experts and economic analysts explained that the broader debate over the CLARITY Act centers on defining regulatory authority over the digital asset industry. The legislation aims to clarify roles between federal regulators, moving away from enforcement-heavy strategies. However, ethics advocates stress that maintaining public trust depends on clearly separating regulatory oversight from private financial interests. Scott Greytak, deputy executive director at Transparency International U.S., said that citizens expect officials to choose between regulating the industry or profiting from it. He added that lawmakers need to close crypto conflict-of-interest loopholes or scrap the CLARITY Act altogether to preserve government integrity.
Calls Mount to Remove Grandfathering of Existing Crypto Investments
As the Senate reviews the bill, pressure grows from ethics groups for Congress to resolve conflicts of interest. Oversight experts warn that allowing exemptions for pre-existing commercial ties sets a dangerous precedent for federal ethics enforcement. Representatives from both advocacy organizations stressed that eliminating these loopholes is the minimum needed to rebuild public trust in federal oversight of financial markets.
The future of the CLARITY Act depends on whether committee negotiators include binding ethics rules before the final vote. Congressional aides shared that bipartisan discussions on possible amendments to strengthen enforcement are ongoing. Ethics advocates warned that passing the bill without comprehensive restrictions on conflicts of interest could undermine regulatory credibility and sustain corruption issues across the government.