- Democracy Defenders Action and Transparency International claimed that the CLARITY Act’s current provisions are not enough to deter top elected and appointed government officials from profiteering in digital assets.
The Republican Party released a revised version of the Digital Asset Market CLARITY Act last week. It incorporated several compromises to address the Democratic Party’s ethics concerns on the draft bill’s provisions.
However, the GOP’s proposal failed to please many Democratic Party lawmakers. Senator Angela Alsobrooks’ group even called the bill’s new ethics language an “unserious offer.” Meanwhile, big banks insisted that the bill’s stablecoin rules still carried deposit flight risks.
Additionally, law enforcement organizations were divided over the CLARITY Act’s Blockchain Regulatory Certainty Act (BRCA) section that provides safe harbor provisions for decentralized, non-custodial software developers.
Democracy Defenders Action and Transparency International Oppose Current Version of The CLARITY Act
Non-profit, non-governmental organizations Democracy Defenders Action (DDA) and Transparency International (TI) aired their position on the current state of the CLARITY Act on Monday. According to them, the bill still doesn’t provide “real ethics reform.”
Citing legal ethics experts within their ranks, DDA and TI argued that the Republicans presented a “narrowly drawn” compromise last week that was “grandfathered in existing cryptocurrency investments and financial relationships, and lacked true enforcement mechanisms.”
“Legislative ethics without real enforcement is nothing more than a green light for corruption,” said Virginia Canter, chief counsel at DDA.
“The American people understand a simple principle: You can regulate an industry, or you can profit from it—but you can’t do both,” added Scott Greytal, Deputy Executive Director at TI US.
Given these things, the groups recommended several measures to address what they considered “dangerous loopholes” in the pending legislation.
Sweeping Prohibition on Financial Interests in Digital Assets
First, DDA and TI urged senators to totally prevent the president, vice president, members of Congress, other covered senior government officials, and their spouses from having any financial stake in the digital asset marketplace outside of diversified registered investment funds. It includes restrictions on direct ownership, revenue-sharing, trading, sponsorship, and endorsement of digital assets and related companies.
Restrictions on Immediate Family Members
Second, they pushed to extend the restrictions to the immediate family members of covered elected and appointed government officials. The ban should include spouses and dependent children. Additionally, the law should bar their adult children from using connections, information, and proximity to power to the benefit of any digital asset project or enterprise.
No Grandfathered Provisions
Third, the groups opposed exemptions for activities already existent before the CLARITY Act’s passage. All covered officials must divest from business interests tied to digital assets.
Strict Disclosure
Fourth, DDA and TI called for disclosure mechanisms aligned with securities, commodities futures, and other investments. It should cover digital asset ownership, as well as reportable income, sales, purchases, exchanges, and other related activities, whether or not they came from remuneration.
Tough Enforcement Rules
Fifth, the organizations wanted strict penalties for violators, removal of sunset dates, and other terms that would exempt presidents at the end of their terms. Likewise, they supported Senator Alsobrooks’ recommendation to expand investigative powers from the sole authority of the Attorney General to State Attorneys General and private actors.
