The Clarification Act, Trump's memoin, and Warren's request for the SEC to investigate incidents

The most important regulatory bill in the cryptocurrency industry has stalled over the president's own memein

Senators Elizabeth Warren and Richard Blumenthal have just asked the Securities and Exchange Commission to launch an investigation, and the ethics provisions of the Clarification Act are still the last outstanding part of the bill blocking a vote. The irony is that the bill, which was meant to bring regulatory clarity to cryptocurrencies, could not move forward because the most powerful man in the United States issued a token-a token that embodies the kind of regulatory ambiguity the bill is trying to address.

Summary

Senators Elizabeth Warren and Richard Blumenthal sent a letter to Securities and Exchange Commission Chairman Paul Atkins on August 4 requesting an investigation into the $TRUMP token, noting that investor losses were estimated at $3.8 billion, while the president reported a profit from the token of $636 million.

The Digital Asset Markets Clarity Act is the best prospect for the cryptocurrency industry in U.S. market structure legislation, but the bill remains stalled because Democrats and Republicans cannot agree on an ethics clause to govern government officials 'participation in cryptocurrency projects.

The U.S. Securities and Exchange Commission has declared that minocoins are "generally outside its sphere of influence" and are not securities under current law, so it is unlikely that the Commission will take enforcement action against $TRUMP.

President Trump agreed to reduce restrictions on his cryptocurrency participation, but Democrats rejected the proposal as insufficient, and bipartisan negotiators Tom Tillis and Ruben Gallego are trying to draft a compromise that is acceptable to both parties.

The $TRUMP token reached a high of about $46 in January 2025 and is currently trading at close to $1.47, with the vast majority of nearly a million buyers at a loss, while the president's entity earns revenue through transaction fees and initial allocation sales.

What Can the Clarification Act Do

The Digital Asset Markets Clarification Act aims to address the jurisdictional ambiguity that has plagued U.S. regulation since the birth of the cryptocurrency industry. Currently, there is no clear legal framework to determine whether a token is a security (regulated by the Securities and Exchange Commission), a commodity (regulated by the Commodity Futures Trading Commission), or another category.

The bill creates a functional test for determining the regulatory classification of tokens. Tokens that are sufficiently decentralized (i.e., no single entity controls them) will be classified as digital commodities and regulated by the Commodity Futures Trading Commission. Tokens that operate as investment contracts (buyers rely on the efforts of centralized teams to earn returns) remain securities under the jurisdiction of the U.S. Securities and Exchange Commission.

The bill also creates a registration path for cryptocurrency exchanges, sets disclosure requirements for token issuers, and provides a regulatory framework for stablecoins to supplement the GENIUS Act, which is specific to stablecoins.

For the cryptocurrency industry, the Clarity Act means the difference between operating in a regulatory gray area and having clear rules. Projects whose U.S. release is delayed due to enforcement risks will have a way forward. Exchanges that restrict token listings due to uncertainty in securities laws will have clearer standards. Investors will receive standardized disclosures that most crypto assets currently lack.

The bill's advancement in Congress has broad bipartisan support. Historically, cryptocurrencies have been divided by partisan divisions-Republicans tend to relax regulation, Democrats tend to strictly regulate-but as both parties recognize the electoral weight of voters interested in cryptocurrencies, this political dynamic has begun to shift. The White House said in April that a deal was "very close."

Subsequently, the ethics clause became an obstacle.

The moral battle to freeze everything

The core controversy is narrow but politically explosive: Should the Clarification Act include provisions that restrict senior government officials, including the president, from directly profiting from cryptocurrency projects during their term?

Democrats believe that any comprehensive cryptocurrency regulation bill must address the conflicts of interest that arise when the president issues tokens, profits from them, and simultaneously appoints regulators to oversee the industry. They argue that without the ethics clause, the bill would effectively legalize a regulatory framework while ignoring the industry's most prominent conflicts of interest.

Republicans countered that the ethics clause is an expanded scope, that the bill's purpose is to regulate market structure rather than ethics reform, and that adding restrictions on specific individuals could turn bipartisan bills into partisan weapons. The president agreed to accept limited restrictions, but the proposed language was too narrow and Democrats believed it would make no sense in practice.

Negotiations are currently in the hands of Senator Tom Tillis, Republican of North Carolina, and Senator Ruben Gallego, Democratic of Arizona, who are drafting compromise language. The White House participated in the discussions but has not publicly committed to signing a bill that would contain substantial moral restrictions. For every day the bill stalls, the industry operates without the regulatory clarity it is designed to provide.

$TRUMP Tokens: Revenue of US$636 million, loss of US$3.8 billion

Data surrounding $TRUMP gives weight to the moral debate. The token will be launched on January 17, 2025, three days before the presidential inauguration. It reached a high of about $46 in a few days and then fell to about $1.47, down 97% from its all-time high.

Based on blockchain data analyzed by The New York Times and the President's 2025 financial disclosure report, Trump-related entities earned approximately $636 million from the token through initial allocation sales and ongoing transaction fees charged by agreements.

On the other side of the books, nearly a million buyers have accumulated losses of approximately $3.8 billion. The asymmetry is obvious: for every dollar the president earns, buyers lose about six dollars. This ratio is not uncommon for memoin, but the participation of a current president in a profit-making entity is unprecedented.

The token experienced a brief price surge during two Mar-a-Lago dinners, and top token holders were invited to have dinner with the president. These activities temporarily reversed the downward trend in prices but failed to maintain any rebound. The dinners themselves highlight the conflict: the president is both the most powerful figure in cryptocurrency regulation and the host of events that reward his personal largest holders of meminoin.

What does Warren's letter require and why it may not work?

Warren and Blumenthal wrote to Securities and Exchange Commission Chairman Paul Atkins requesting a formal investigation into whether $TRUMP involved "a potentially fraudulent money-gathering scheme that had an impact on market integrity and stability." The letter cited an estimated $3.8 billion in buyer losses and $636 million in presidential profits as evidence of asymmetry worthy of regulatory review.

This requirement faces several obstacles. First, the U.S. Securities and Exchange Commission under Chairman Atkins 'leadership has a completely different attitude towards cryptocurrency enforcement than it was in the Gensler era. The current U.S. Securities and Exchange Commission has suspended or revoked multiple cryptocurrency enforcement actions and adopted a policy of regulating through rulemaking rather than enforcement.

Second, the U.S. Securities and Exchange Commission issued a staff statement in February 2025, clearly stating that memoin "is usually outside its sphere of influence." The statement said that memin has "limited or no use or function" and does not constitute a security under the Howe Test because buyers do not invest based on the expectation of benefiting from the efforts of others. According to the U.S. Securities and Exchange Commission's own issued position,$TRUMP is not a security and therefore does not fall within the agency's enforcement jurisdiction.

Third, Atkins was appointed by President Trump. Requiring presidential appointees to investigate the president's personal financial interests is more a political act than a regulatory act. Warren and Blumenthal knew this. The letter's main function is political: It creates a public record of conflicts of interest and forces the Securities and Exchange Commission to respond (or manifest inaction) that could be cited in debates on the Clarification Act.

This letter is a negotiating tool dressed in the guise of a regulatory request. Its real audience is not the Securities and Exchange Commission, but the handful of senators who will determine whether the Clarification Act can be passed with or without substantial moral constraints.

The U.S. Securities and Exchange Commission's minocoin blind spot

The U.S. Securities and Exchange Commission's February 2025 minocoin statement created a regulatory gap, and the $TRUMP incident exposed this. By declaring miniin outside its jurisdiction, the U.S. Securities and Exchange Commission has effectively created a financial product category without federal regulatory oversight.

The Commodity Futures Trading Commission regulates commodities and derivatives, but has not yet claimed jurisdiction over mein. The Federal Trade Commission regulates consumer fraud but has taken no action on miecoin losses. State securities regulators have limited resources and jurisdiction for tokens traded globally.

This gap means that a sitting president can issue tokens, collect hundreds of millions of dollars in revenue, and watch nearly a million buyers lose billions of dollars without a federal agency having a clear mandate to investigate or take action. The Clarification Act should have filled such gaps by creating a comprehensive token classification framework. However, the most prominent example of the consequences of this gap became the reason why the bill could not be passed.

The irony is getting stronger. If the Clarification Act is passed without an ethics clause, it would create a legal framework that implicitly allows government officials to profit from token offerings. If it is passed with strong ethics clauses, it will retroactively create restrictions that apply to the president's existing tokens. If it fails at all, the industry will continue to lack the regulatory clarity that could have attracted institutional capital, encouraged responsible innovation, and protected retail investors from the kind of losses experienced by $TRUMP buyers.

The dilemma of the cryptocurrency industry

The cryptocurrency industry's Washington lobby has spent years and hundreds of millions of dollars building bipartisan support for regulatory legislation. The Clarity Act is the culmination of this effort. However, it has been kidnapped by a conflict of interest-a conflict that the industry cannot publicly criticize or alienate a president who is generally friendly to cryptocurrencies.

Major industry trade groups are careful to avoid commenting specifically on $TRUMP. Their public statements focused on the importance of passing the Clarification Act and avoided mentioning ethics clauses. Privately, industry leaders acknowledge that the president's memoin complicates their legislative strategy. The existence of the token makes it more difficult for Democrats to vote for the bill without moral restrictions, and for the industry to argue that moral restrictions are unnecessary or appear to endorse the president's conflict of interest.

Some industry participants took a different approach, arguing that the $TRUMP incident just demonstrated the need for clear rules. According to this argument, under a comprehensive regulatory framework, the president's memin will either be subject to disclosure requirements and trading restrictions or be clearly classified as outside regulatory boundaries. Either way, it's better than the current state of ambiguity-no one knows what rules apply and no agency claims jurisdiction.

The problem with this argument is timing. The industry hopes to pass the bill now, and the ethics clause is an obstacle to current passage. Any delay could completely lose the political window. If the bill continues into the next Congress, the committee process will have to be restarted, and the bipartisan coalition that has advanced it here may not be able to reorganize.

What will happen if the bill dies

If the Clarification Act fails to pass this session, the consequences will exceed the cryptocurrency industry's policy wish list.

The Securities and Exchange Commission will continue to operate under the "enforcement first" approach of previous years or the current "let go" approach, depending on which government is in power. Neither approach provides the regulation-based, predictable framework needed for institutional capital. Major financial institutions that wait for regulatory clarity before launching cryptocurrency products will continue to wait, or structure their products under existing securities laws, which increases compliance costs and makes many cryptocurrency products economically unviable.

Token projects will continue to be launched in offshore jurisdictions and restrict access by U.S. users, as they have for years. The U.S.'s share of global cryptocurrency innovation and trading volume will continue to decline relative to jurisdictions such as the European Union, which implemented the MiCA framework in 2024 and has attracted projects looking to gain regulatory certainty.

Retail investors will continue to be in the current environment: Miocoin exists in a regulatory vacuum, lacks disclosure requirements, and there is no regulatory avenue to investigate or remedy incidents such as a $3.8 billion loss to $TRUMP buyers. The Clarification Act does not specifically address the memin issue, but its classification framework will at least force the determination of whether specific tokens fall under the jurisdiction of the U.S. Securities and Exchange Commission or the Commodity Futures Trading Commission, thus ending the current situation where no agency is responsible.

The deepest irony is that the $TRUMP token is both the strongest argument for the need for the Clarification Act and the reason why it cannot be passed.

Points of concern

Tills-Gallego compromise wording. The bipartisan combination negotiating the ethics clause will determine whether the bill lives or dies in this Congress. Focus on a draft that could restrict government officials from issuing new tokens while exempting existing ones-a structure that would respond to Democratic concerns without requiring the president to spin off $TRUMP.

Securities and Exchange Commission's response to Warren's letter. A formal investigation is unlikely, but the Securities and Exchange Commission must respond in some form. The nature of the response-whether a brief rebuttal or a detailed explanation of jurisdictional limitations-will indicate how the current committee views its role in the memin space.

Legislative agenda for September. After Congress's recess ends, the window of time is very narrow before the mid-term election cycle takes up legislative bandwidth. If the Clarification Act does not progress in September and October, its chances of passing it during this session will be significantly reduced.

$TRUMP token price trend. Any significant price fluctuations (up or down) in $TRUMP will reignite media attention on ethical issues. A rebound will cause insider trading issues. Further declines would increase estimated buyer losses and strengthen the case for investigation.

Other government official tokens. If the existence of $TRUMP normalizes this practice, other elected officials may issue their own tokens. Each new release will add pressure to the ethics clause debate and make it less feasible to pass the Clarification Act without restrictions.

What is the Clarification Act?

The Digital Asset Markets Clarity Act is proposed U.S. legislation that would create a comprehensive framework for classifying crypto assets as securities (regulated by the U.S. Securities and Exchange Commission) or digital commodities (regulated by the Commodity Futures Trading Commission). It will also create registration paths for cryptocurrency exchanges and set disclosure requirements for token issuers, providing the regulatory clarity the industry has sought for years.

Why was the Clarity Act suspended?

The bill was shelved because Democrats and Republicans were unable to agree on an ethics clause that would restrict senior government officials, including the president, from directly benefiting from cryptocurrency projects during their term. President Trump's $TRUMP memin put the provision at the center of debate, with Democrats refusing to support the bill without substantive restrictions.

What did Warren and Blumenthal ask the Securities and Exchange Commission to do?

On August 4, 2026, Senators Elizabeth Warren and Richard Blumenthal sent a letter to Paul Atkins, Chairman of the U.S. Securities and Exchange Commission, requesting a formal investigation into the $TRUMP minicoin. They cited an estimated $3.8 billion in investor losses and $636 million in presidential profits, arguing that the asymmetry raised questions about potential fraudulent enrichment.

Will the Securities and Exchange Commission investigate $TRUMP?

Under the current committee's leadership, a formal SEC investigation is unlikely. The U.S. Securities and Exchange Commission, under Chairman Paul Atkins (appointed by President Trump), has scaled back cryptocurrency enforcement, and in February 2025 the agency issued a staff statement declaring that memin is generally outside its jurisdiction. The Warren-Blumenthal letter was used more as a political pressure tool in the Clarification Act negotiations than as a realistic law enforcement request.

How much money did Trump make from $TRUMP?

According to the President's 2025 financial disclosures and blockchain data analysis, Trump-related entities earned approximately $636 million from $TRUMP tokens through initial allocation of sales and ongoing transaction fees. During the same period, nearly one million buyers lost a total of approximately US$3.8 billion.

Is $TRUMP a security?

A February 2025 staff statement from the U.S. Securities and Exchange Commission stated that memocoins generally do not constitute securities because they have limited or no use or functions, and buyers do not invest based on the expectation of benefiting from the efforts of others (Howe Test Standard). According to the U.S. Securities and Exchange Commission's own issued position,$TRUMP is not covered by securities law, although critics believe the token's connection to the current president creates unique circumstances that staff statements did not anticipate.

What will happen if the Clarification Act is not passed?

If the bill fails, the U.S. cryptocurrency industry will continue to operate without a comprehensive regulatory framework. The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission will continue to argue over the jurisdiction of various tokens. Projects will continue to be launched overseas to circumvent U.S. regulatory ambiguity. Institutional investors will continue to wait for clarity before entering the market on a large scale. And memoin will remain in a regulatory vacuum, with no federal agency asserting supervisory powers.

What is the ethics compromise being negotiated?

Senators Tom Tillis (Republican-North Carolina) and Ruben Gallego (Democrat-Arizona) are drafting compromise language for the ethics portion of the Clarification Act. The expected approach would restrict government officials from issuing new tokens while potentially exempting existing positions. The White House has participated in discussions but has not yet committed to signing a bill that would substantially limit the president's existing cryptocurrency interests.