X Post of the Week
Weekly Policy Update
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Senate CLARITY Act Progress Stalls as Congress and Administration Discuss Ethics Provision
- Senior White House officials met with members of the Senate to negotiate the eth-ics section of the CLARITY Act. This specific provision, which restricts the personal cryptocurrency business interests of senior government personnel, remains a primary point of contention, as Senate Democrats have consistently demanded these limits to address potential conflicts of interest. Given the limited floor time available in the Senate, the probability of the bill's timely advancement depends heavily on achieving an adminis-trative compromise during these sessions. A failure to resolve the ethics dispute will likely delay the legislation past upcoming legislative windows.
- Senators Chris Murphy (D-CT), Chris Van Hollen (D-MD), and Jeff Merkley (D-OR) expressed opposition to the CLARITY Act, describing the current framework as a "corrupt bill." The senators’ pushback highlights frustration with ongoing negotiations regarding including ethics language in the final legislation. This issue complicates the bill's path through the full Senate, where substantial bipartisan support is necessary for final passage. Democrats have stated that they will not support the legislation without addressing ethics concerns, and this introduces scheduling constraints as the legislative calendar advances, reducing the near-term probability of a floor vote unless further amendments are included to satisfy the dissenting lawmakers.
- The Federal Law Enforcement Officers Association (FLEOA) formally endorsed the Digital Asset Market Clarity Act, marking the second major law enforcement endorsement following the National Organization of Black Law Enforcement Exec-utives (NOBLE). Notably, however, the FLEOA endorsement is conditional; the associa-tion requested specific legislative modifications to narrow liability protections for Decen-tralized Finance (DeFi) developers (Section 604), enhance accountability in DeFi sys-tems, and explicitly preserve existing federal investigative authorities. While these en-dorsements bolster the bill's standing regarding public safety concerns, the requested amendments highlight ongoing institutional pushback against provisions perceived to hinder law enforcement capabilities. Reconciling these specific law enforcement de-mands with industry interests requires delicate administrative compromise, complicating the path to passage before the impending Senate recess.
- Patrick Witt, the White House's primary liaison for the Digital Asset Market Clarity Act, will take a leave of absence starting July 24 for military training. Witt has been a central figure in negotiating complex provisions of the bill, including stablecoin yield and ethics requirements, between industry representatives and lawmakers. His depar-ture occurs just weeks before a critical August 8 Senate recess deadline. Harry Jung, the Deputy Director of the President’s Council of Advisers on Digital Assets, will takeover as the lead. Jung previously served as Chief of Staff to former CFTC Commissioner Car-oline Pham and has been instrumental in the Council’s work. Why it matters for Zcash:
- The CLARITY Act would generally help the crypto industry, and the Zcash ecosystem, through a deliberate and thoughtful market structure framework that would task the CFTC with oversight over digital commodities.
- Over the past few weeks, the discussion has shifted from maintaining the developer pro-tections in the bill to ethics concerns. If ethics concerns are not addressed to Democrats’ satisfaction, the odds of the bill’s passage decrease given the tight margin in the Senate (53 Republicans and 47 Democrats/Independents).
- The window for passing the CLARITY Act in the Senate is also shrinking as the Senate will recess from August 8 to September 14. If the bill is passed in September, it will need to be reconciled with the House–but the timing around this is complicated as September and October will focus heavily on elections, prior to the midterm elections in November. If the legislation does not pass, the SEC and CFTC are working on regulations that would provide more clarity for industry with respect to the application of the federal secu-rities laws.
Action Item
Call your senators’ offices to advocate for the passage of the CLARITY Act with developer protections preserved and join the PGPZ Coalition Market Structure Working Group.
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U.S., UK Move to Align Rules for Tokenized Finance Across World's Largest Financial Markets
The U.S. Department of the Treasury and the UK's HM Treasury, working through the Transat-lantic Taskforce for Markets of the Future, have released a 10-point roadmap aimed at coordi-nating the oversight of tokenized assets, stablecoins, and digital financial markets. Notably, these recommendations do not introduce new statutory rules; instead, they outline a framework for closer cooperation among major regulatory bodies, including the SEC, CFTC, FCA, and the Bank of England. The initiative focuses on exploring common settlement mechanisms and as-sessing whether stablecoins or tokenized funds can be utilized as collateral. While the immedi-ate probability of structural market changes is low due to the non-binding nature of the roadmap, the probability of aligned international supervisory standards and reduced cross-border regula-tory friction over the medium term is significantly enhanced.
Why it matters for Zcash: Coordination between U.S. and UK regulatory agencies signals a long-term shift toward standardized cross-border compliance frameworks that emphasize insti-tutional transparency. As these jurisdictions collaborate to integrate tokenized finance into tradi-tional market infrastructures, a key theme is to harmonize regulatory clarity to support market development for digital assets and tokenization. This could enable more clarity for digital assets, including Zcash, in the UK, and globally, as the U.S. and UK begin to collaborate on regulatory oversight.
Action Item
No action item.
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