The Clarity Act faces Democratic opposition amid ethics disputes and broader crypto market headwinds
Solo commentary by the host of Digital Asset News.
Democratic opposition to the Clarity Act is hardening over ethics provisions — particularly those relating to President Trump's crypto holdings — as the host of Digital Asset News breaks down the latest developments around the proposed crypto regulatory bill. Several Democratic senators, including two who had previously broken with their party to advance the bill out of committee, have declared the updated Republican draft still falls short. The host also notes that the United States Hispanic Chamber of Commerce sent a letter to Senate leaders opposing the bill, citing concerns about deposit flight and reduced lending to Hispanic-owned small businesses. The host covers Senator Lummis's defense of the bill, the House passage of a No Stock Trading Act (also unlikely to pass the Senate), BitMEX's announced shutdown, Coinbase's legal victory against the SEC, positive Bitcoin ETF inflows, and a broader discussion of bear market strategy including capital gains tax planning.
Key Takeaways
FULL TRANSCRIPT
Democratic Senators Oppose the Updated Clarity Act Draft
Host: Well, everybody, it's not surprising, but it looks like the Clarity Act is falling apart. We're going to take a look at what's going on right now today. And just as the thumbnail and title suggest, we're going to get to what Elizabeth Warren thinks about all of this, and then we'll take a look at the positive side, because let me tell you, there are two sides to every story.
This just came out a couple of hours ago. Democrats oppose the Clarity Act as currently written, and the Democrats going against it — there are a lot of them, actually. Today, Senators Ossoff, Booker, Cortez Masto, Hickenlooper, Warner, and others released the following statement after Republicans shared an updated draft of the Clarity Act:
"The Republican proposed text of the Clarity Act, as it currently stands, falls short. Key provisions — including those addressing ethics for elected officials, consumer protection, illicit finance, conflicts of interest, and market integrity — must be strengthened. We've been working in good faith with our Republican colleagues for the past year, and we'll continue to do so over the finish line if they get there."
This just came out as Republicans made some concessions. President Trump also said he'd go along with concessions on ethics. And Democrats are saying it's not good enough. Now, there are two sides to every story — that is for sure. But I'd like to direct your attention to two of the senators specifically: Ossoff and Cortez Masto. For reference, they were part of the banking committee and were the ones responsible for moving this bill forward out of committee. They were the two Democrats who broke with ranking member Elizabeth Warren, while Chairman Tim Scott held the Republican side. These two Democrats broke with their party to get it out of the banking committee, and as we've talked about many times, they said: we are not going to vote for this bill in its current language — you need to change it. Republicans did change it, and they're still saying it's not good enough. And that's pretty much where we are.
Elizabeth Warren's Statement on the Clarity Act
Host: Moving forward from that — saying it's just not good enough — I don't think it'll ever be good enough, quite honestly. Let's take a listen to what everybody's favorite crypto critic, Elizabeth Warren, has to say.
Senator Elizabeth Warren: "1.4 billion. That's what Donald Trump made off cryptocurrency last year alone. While working Americans are struggling to afford groceries and rent, Senate Republicans just released their updated version of the Clarity Act — a bill meant to regulate crypto — and it's going to a vote on the floor. That's a glaring omission. It does not stop Donald Trump from cashing in on his presidency. A new poll found Trump's crypto earnings are deeply unpopular with Americans. And let's be clear — this is our best chance to rein in President Trump's crypto profits. If that's not bad enough, this latest draft bill would make it easier for criminals, cartels, and terrorists to move money and finance their operations. And it fails to protect investors in our financial system. Look, this isn't regulation. This is a giveaway. This bill should be dead on arrival."
Host: That is Senator Warren's position, and let's just say she's not going to vote for it. I'd like to make mention of one piece of what she said — when she talks about this allowing President Trump to cash in on his crypto earnings. I have to think about that and say, well, that's already happened. He already got 1.4 billion. So I get it — you're trying to stop further of this going down the tubes. But we'll see if that can be done.
Also, more bad news. The United States Hispanic Chamber of Commerce just wrote a letter to their senators saying they represent millions of Hispanic-owned businesses across the US. They sent a letter to Senate leaders this week saying they share community banks' concerns that the Clarity Act could accelerate deposit flight. The group argues the bill would reduce lending to Hispanic-owned small businesses and weaken investment in underserved communities. Unfortunately, things are gaining steam against the Clarity Act. I don't make the rules — that's just what is actually happening.
Senator Lummis Defends the Bill on Fox Business
Host: But let's take a look at a counterpoint. Senator Lummis had a pretty good statement on Fox Business. Take a listen.
Interviewer: It seems like you're going to have to make even more concessions on the language around ethics to secure Democratic support. You had several Democrats last night voicing concerns about the updated text, particularly around the bill's enforcement mechanism that places responsibility on the attorney general. Is that the issue right now?
Senator Cynthia Lummis: That is kind of a bright line. We had worked until there was an impasse with Democrats earlier this month because they want state attorneys general to be able to sue elected officials that are subject to this ethics law. That would allow, for example, an attorney general from another state to sue me if they thought I violated the ethics law. When I ran that by senators, they said we don't want that. This ethics provision is not just applicable to the president and the vice president — it's applicable to every House member, every senator, and every federal judge. So we're trying not to plan legislation around one person who holds one office for the next two years, but rather legislation that will serve the House, the Senate, the Judiciary, and the executive branch fairly over time.
The struggle is, of course, that a lot of Democrats are absolutely focused on one person, and that's President Trump. Since President Trump actually agreed that he would have the choice to either put his assets in a blind trust or divest of his participation in digital assets and companies that derive revenue from digital assets — somehow that's not enough. I think it's going to be a struggle. Fortunately, Tom Tillis is working with Democrats to continue to try to find a way that they could support the ethics provisions in this bill. But it's hard for me to see it right now because they're so focused on getting a pound of flesh from President Trump.
Midterm Year Politics and the Odds Against the Bill
Host: As we've talked about many a time, it is a midterm year, and unfortunately because of that, there is a method to the madness. On the opposing side, nobody wants to give anybody a win. The whole goal is to gain seats. If they want to gain seats, why would they give another party a major win? And they know this would be a massive win — Donald Trump would take his victory lap all the way around.
As a quick reminder, midterm years — which we are in right now — are historically not just negative for the crypto space, but also for the S&P 500. Going back to 1931, the average midterm election year shows a pattern that lines up consistently with historical versus actual returns.
And lastly, before we move on, I'd like to make this point: of all the bills that come through the House and Senate, do you know how many actually get passed into law? Three to seven percent. Three to seven percent of bills put before Congress become law. Ninety-three to ninety-seven percent will fail. I know people want this to happen and I'm rooting for it as well, but I never really thought this would actually come through — especially in a midterm year. I was hoping I was wrong, but it seems like we're going the opposite direction. We'll probably get a push and a surge, but at the end of the day, the people who are against this are heavily, heavily against it.
Bear Market Perspective and Accumulation Strategy
Host: There is some good news — a little light of hope. Just because we don't get one thing doesn't mean we collapse because of one bill. Things will march on. It'll be all right. Barriers are pretty much like this all the time.
I'd like to remind you that these are good times to accumulate. I remember the same thing happened in 2022 — it was the worst year back then. We had FTX, Voyager, Celsius, BlockFi, Luna, Three Arrows Capital — everything collapsed around us. Everybody said it's dead, it's dead, it's dead. And it came roaring back and it was fine.
Looking at moving averages, we're right around that 200-week moving average, which everybody loves to talk about — especially traders. When it falls below that, those are historically good times. We're looking at around $58,000–$59,000 right now. Going back into 2022, I still believe we have a further way to fall for Bitcoin. And it depends on how you look at that. If you look at it and say, "That's awful because the Bitcoin I own is going to go down," or if you look at it like I do and say, "This is great because the Bitcoin I maybe bought above $59,000 — which I did — maybe I can lower my cost basis and accumulate like I should have done in 2022."
I should have dumped everything in 2022. Back then it was $19,000. Then in June, July, August, there was a nice little pump from $19,000 all the way up to $24,000. Everybody was excited. But then after August, we started a breakdown again. We went below the 200-week moving average, and as a matter of fact, we went below the 250-week and the 300-week moving averages. Those were great times to buy.
It's all how you look at it — it's all perspective. To me, I knew this year was going to be rough. That's just how it usually goes. The ones that stick around are the ones that are rewarded. The 300-week moving average right now is at a price of around $55,000. The 250-week moving average is around $58,000–$63,000. So those are the levels to watch.
BitMEX Announces Shutdown
Host: BitMEX is shutting down. It's uncanny how much this is starting to feel like 2022, except there's not as much fraud.
The announcement reads: "Dear BitMEX users, today we share with a very heavy heart that BitMEX will shut down its operations effective September 23rd."
Hey, that's nice — they told you when it's going to shut down, unlike Voyager and Celsius, which pretty much shut down the day of and said, "Sorry, losers." The statement continues: "We want to reassure you that your assets remain fully safe and under your control during this transition period. This announcement is to give enough time to ensure a smooth withdrawal process. From today, we strongly encourage all users to close your positions and withdraw your funds as soon as convenient."
I appreciate BitMEX for doing it the right way and just saying, "Hey, we're winding down operations." Some things just don't work out. Just because something has a great backstory, a great product, or a large community doesn't mean that business is going to make it. That's true for exchanges, for DEXes, and even for crypto projects. That's just how it is.
Market Updates: Jobless Claims, Trump Analysis, and ETF Flows
Host: As a reminder, crypto is down a little bit over the last 24 hours. There is some good news, though. Initial jobless claims came in under the median forecast of 212,000. Last month it was 229,000. This time it came in at 187,000 — well below that. That's nice.
Of course people say, "But what about inflation?" I get it — inflation is inflation, it's not going to stop. But I think the bigger issue right now isn't just inflation — it's what I call TA: Trump Analysis. $1.3 trillion has been wiped out from US stocks as Trump reportedly considers a massive strike on Iran. At this point, it almost feels like a WWE episode — there's a big buildup, a little argument, a little fight, and then all of a sudden they're friends again. Don't be shaken out. That's just pretty much par for the course.
However, ETF flows are positive. This is the seventh consecutive day of positive inflow for Bitcoin ETFs. One thing to note — it's kind of low at around $38 million, although July 16th was $33 million, so it's positive. Ethereum had four positive days, but the fifth day was a red day, I have to admit.
Coinbase Wins Lawsuit Against the SEC
Host: Good news: Coinbase beat the SEC. I don't know if you remember this, but there was Operation Chokepoint, which was essentially an effort to stop all the exchanges. Well, Coinbase took them to court, and after three or four years, they won their case today. And that's great.
This is what it was all about: Coinbase announced its lawsuit victory against the SEC, exposing the loss of nearly a year's worth of text messages from senior officials at the SEC, including former chair Gary Gensler. For some reason, after Coinbase filed suit, those text messages were wiped. Ah, Gary — we miss you. This was during peak anti-crypto enforcement, roughly 2021 to 2025.
Here's what they won: first of all, bragging rights — that's always nice. Second, it is symbolic. And they settled, with the SEC paying Coinbase $150,000 in legal fees. Watch out — $150K. Hey, at least they got something. Again, a symbolic win. I'll take it. I like it when the little guy wins.
Capital Gains Tax Planning in a Bear Market
Host: Before we get into the Q&A, I have to ask everybody a question about taxes. The reason I'm bringing this up is that in bear markets, people don't really think too much about the gains they're potentially going to have, and that's where they kind of fumble the ball.
Let's just say for the sake of argument that sovereign nations really start to accumulate Bitcoin, altcoins come out with a massive push for tokenization like we've seen, and maybe we start to do a real Bitcoin treasury with the government — something happens that just takes things off right now in this bear market, like what happened in 2022. Nobody thought Bitcoin at $15,000–$17,000 would go to $126,000. Nobody thought Solana at $9 would go anywhere near where it went. And nobody really thought — okay, you got me on Ethereum, that one pretty much stayed stagnant. But the point is, we need to think about these things now, before later on.
So I have a question for everybody — put it in the comments. If you're here buying the bear, how do you deal with capital gains taxes? Do you just say, "I'm never going to sell it, it's going to go to my kids and grandkids, so I don't have to worry about it — they can use it as an asset"? Are you doing loans — taking loans out against your holdings like wealthy investors do, keeping it in perpetuity? Do you have a retirement account set up for this? Or are you just going to pay the tax when you sell?
So far I've got about 100 votes on this. Almost 52% — just about half — say they're just going to pay the capital gains tax when they sell. And it depends: minimum long-term capital gains, you're looking at 15 to 20%. Short-term is way higher than that. I'm just curious what people are planning, because at some point these things are going to happen.
Q&A
Host: Now let's break into the Q&A, which is the best part of the show.
Wars says, "Bottom of the bear is my favorite time." It's a good time — for the ones that get it. Bear markets don't last. Neither do bull markets. But when you're in the bear, it feels like it's going to last forever. Coincidentally, when you're in a bull market, doesn't it feel like it's never going to stop? There's so many people behind this, here comes BlackRock, here comes the US government, here comes the president, here comes the SEC and the CFTC — everybody's with us. And then it just collapses. Wherever you are, it always feels like it's going to keep happening forever, and it never does.
William says, "Crypto is dead and died last cycle." I mean, it's kind of dying — I would admit that. More people, especially the newcomers, are leaving in droves. But they were never going to stay anyway. That's okay.
Someone mentions Kraken is insolvent — it's not Kraken. There's an exchange called Kakan, which declared bankruptcy and is from Rotterdam. So there's a little bit of a difference there.
Someone says they're going short. Even Brian Armstrong said he's not going to keep Coinbase around if the Clarity Act doesn't pass — they'll go overseas. That's nice posturing, but maybe they do a little bit of that, not the whole company.
Liberty and Trust says Arthur Hayes made his exit and is living it up in Thailand. Here's the thing — I know a lot of people don't like Arthur Hayes because they think he's a pump-and-dumper, but he did get out of a lot of his positions during the bull market when things were going up. He just did a better job than most of us. And before people say he's all about his own portfolio — well, yeah, of course he is. I'm not saying I approve of everything he does. I'm just saying he sold at the right time and got out of BitMEX about three or four years ago during his legal issues. So it wasn't because of him that it shut down now.
Clarity is not passing. I know. That's true.
Someone mentions using CoinLedger to track tax lots and doing a quick sell-and-rebuy of Solana in October to capture losses. And one more thing I fell short on mentioning — if you have a retirement account, especially a Roth IRA, you can trade within that retirement account and take profits tax-exempt. So if you invested in a bunch of meme coins, next cycle remember to trade within that retirement account. When you hit the age of 59½ and you're able to take things out tax-free, it would really be nice if those things had appreciated significantly. What I did was keep most of it in Bitcoin and Ethereum, put some into gold and silver — didn't think they'd do anything, and they're now number two and three in my account. I also had some meme coins that I bought and sold for a little profit, and it was great because it's tax-exempt within the Roth.
Kamikaze is right — if the Clarity Act doesn't pass, it's not the end of the world. I'd prefer no bill to a bad bill. And it looks like they're going to move the vote forward by next week because the senators have a recess coming up. If it gets voted down, that'd be the end of July. Wouldn't that be uncanny? Because that would line up perfectly with the last cycle — a little mini rally in June, July, into August, then a collapse, and then November happened with $15,000, and then it was sideways for a while.
Someone says the banks don't like competition in the most capitalist country in the world. That's very true.
Liberty asks whether people should consider getting into precious metals if they haven't already. Yes — I think gold and silver have taken quite a hit after a massive run-up. Seeing that in my Roth IRA, I was surprised it did so well. I never understood why some gold and silver people hated crypto. I think we're all on the same wavelength — we believe the government will continue to debase the currency as it keeps printing money out of thin air, so we have to hedge against that as a store of value. You can have gold and silver, you can have Bitcoin — gold 2.0 — and I think one of those will do just fine. I have no animosity toward Peter Schiff anymore. It's just him thinking that's how things go.
Tesla is getting crushed — down almost 14% in one day because Q2 earnings missed the beat. I have a DCA order for Tesla on Robinhood, so this is actually good news for me. Six months has been rough for Tesla. Always depends on your time horizon.
Joe says, "My losses offset my gains so far." That sounds good.
Someone says I should be more moon-boyish to get more subscribers. Apparently that's the secret, but it's dumb.
Someone thinks the Clarity Act can pass if they dial in the ethics issues — it all comes down to Trump accepting ethics restrictions. I don't know how much more you have to do. I did see a post from Coin Bureau noting that as the language is currently laid out, there are still ways to get around it.
I also saw that the House of Representatives passed a No Stock Trading Act, which was pretty amazing. I wonder what Nancy Pelosi's husband thinks of that. It goes to the Senate now — and also probably not passing. But it's good for optics, especially right before the midterms. Hey, look at what we're doing — we're stopping dirty politicians from trading stocks. Now it's up to the senators.
Someone asks whether SpaceX and Tesla will face regulatory issues if they merge. I think there's always going to be some kind of legal hiccup, so yes. Would it be a monopoly? I don't know — they do different things. But I think it would be a monopoly if we go to Mars. You need rockets — SpaceX, check. You need power and solar — Tesla, check. Need to live underground — Boring Company, check. Need a brain upgrade — Neuralink, check. So sure, let's see.
Someone says I'm not really in Puerto Rico and it's a green screen. Someone else says to promote false narratives to get more views — yeah, that's also true.
Someone had a hangover from watching a three-hour earnings live call that started happy and ended painful. I'm sure it started off awesome — "What? We missed earnings?" Ow.
Cyber Skrilla — if you don't watch Cyber Skrilla, he's always got good stuff on Tangent, which is my favorite cold storage device. If you're using Ledger, my question is why.
Ran says a lot of people made money on average, including the president, in reference to ethics over crypto. He should have stayed out of buying crypto until he was out of office. Or I would have just really appreciated him to lie like all the other presidents and just shut his mouth. I don't have a problem with corruption if I don't see it — just do your corruption quietly, get off social media. Every single president does it. I just don't have to hear about it.