Statements

Lawmakers Must Close the Crypto Conflict-of-Interest Loopholes or Scrap the CLARITY Act

07/27/2026

A statement from Transparency International U.S.
July 27, 2026

WASHINGTON, D.C.—Democracy Defenders Action and Transparency International U.S. today condemned the Digital Asset Market Clarity Act and called on the Senate to provide real ethics reform. While the Senate’s updated bill language purported to establish ethics requirements for federal officials overseeing the digital asset marketplace, the organizations argue the law fails to establish meaningful reform aimed at protecting the integrity of the digital asset marketplace, American consumers, and the nation’s economy.

According to legal ethics experts at Democracy Defenders Action and Transparency International U.S., the CLARITY Act text released last week (opens in a new window) was narrowly drawn, grandfathered in existing cryptocurrency investments and financial relationships, and lacked true enforcement mechanisms.

To prevent public officials’ abuse of the digital asset marketplace, the two organizations argue that legitimate reforms must include at least the following provisions:

  • Prohibit all Financial Interests in Digital Assets: Covered officials must be precluded from having any financial stake in the digital asset marketplace outside of diversified registered investment funds. That means: no direct ownership of digital assets or digital asset companies; no trading in digital assets; no property or income rights emanating from the sale of digital assets, including licensing or revenue-sharing arrangements; no sponsorship or endorsement of digital assets, including those emanating from pre-existing deals; and no participation in the issuance of cryptocurrencies.
  • No Family Loopholes: Any law must cover the entire immediate family of the covered official, including their spouse and dependent children. In addition, adult children should be prohibited from using connections, information, and proximity to power to advance any digital asset venture or enterprise.
  • No Exemptions for Ongoing Activities: Covered officials must be required to come into compliance with the law by divesting of their existing interests. No exception should be made for activities that were begun before the passage of the law.
  • True Disclosure: Covered officials must be required to disclose all digital assets they own, purchase, or sell. Consistent with existing requirements for securities, commodities futures, and other investments that means reporting any digital assets owned, any that have created reportable income, and prompt reporting of purchases, sales, and exchanges regardless of whether they were done for “remuneration” or not.
  • Real Enforcement: Covered officials must be subject to real penalties for failure to adhere to the law. That means no sunset dates, no get-out-of-jail free cards at the end of the President’s term, and independent avenues of enforcement. Not only should the Attorney General have the authority to investigate violations under an extended statute of limitations, but private actors and State Attorneys General should have the ability to protect the interests of their citizens against abuse of the digital asset marketplace by public officials.

“Legislative ethics without real enforcement is nothing more than a green light for corruption,” said Virginia Canter, chief counsel and director of ethics and anti-corruption at Democracy Defenders Action. “If Congress is serious about market integrity, they must abandon the White House’s half-measures and commit to a total, non-negotiable ban on digital asset interests for officials and their families, full divestment without exceptions, and independent enforcement that doesn’t expire when a term ends. This is what the American public deserves, and anything less is a dereliction of Congress’ constitutional duty.”

“The American people understand a simple principle: You can regulate an industry, or you can profit from it—but you can’t do both. Congress should be eliminating conflicts of interest, not engineering exceptions to them. That’s why Congress must close every major loophole, not just the politically convenient ones,” said Scott Greytak, Deputy Executive Director at Transparency International U.S. 

Members of the public deserve to know that their government is working in their best interest, the groups argue. These common sense reforms are the minimum that Congress must accept to prevent abuses and self-dealing by government officials—anything less is insufficient to protect the public trust.

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Democracy Defenders Action brings together a nonpartisan team to work with national, state, and local allies across the country to defend in real-time the foundations of our democracy.

Transparency International U.S. (opens in a new window) is a nonpartisan, nonprofit organization working to advance transparency and accountability as a cornerstone of democracy, economic prosperity, and peace.