Trump may receive tax breaks under the Senate Cryptocurrency Ethics Bill...

Why could a cryptocurrency ethics proposal benefit Trump?

A bipartisan ethics proposal designed to win President Donald Trump's support for the Clarification Act could also provide substantial tax breaks for individuals by requiring him to divest cryptocurrency-related businesses. Last week, Republican Senator Tom Tillis of North Carolina and Democratic Senator Ruben Gallego of Arizona submitted proposed ethics provisions to Trump that would require the president to sell interests related to cryptocurrency businesses. People familiar with the matter said such divestitures could allow Trump to defer capital gains taxes on these assets for several years, and could even evade some tax obligations entirely. As the Trump family has established extensive financial interests in digital assets, potential tax savings could amount to millions of dollars. In June this year, Trump reported that his family's cryptocurrency business had generated more than $1.4 billion in revenue over the past year. These interests include TRUMP and MELANIA memecoins launched shortly before the inauguration, as well as the World Free Financial Cryptocurrency project associated with members of their family. The ethics proposal has not yet been made public and is still in the negotiation stage between lawmakers and the White House. As of Thursday, the White House had no comment on the reported tax impact.

Why are ethical issues so important to the Clarification Act?

The Clarification Act aims to establish a federal framework for the cryptocurrency market and define the division of powers of financial regulators in the field of digital assets. The bill requires 60 votes to pass in the Senate, which means Republicans need Democratic support. Several Senate Democrats have made stricter moral restrictions conditional on supporting the bill. Their concern is that elected officials may influence crypto policies while holding financial interests that may benefit from those decisions. The Tills-Gallego proposal attempts to solve this problem through mandatory divestiture. The latest version also allows state attorneys general to enforce ethics rules, giving enforcement powers beyond the federal Department of Justice. This differs from an earlier version approved by Trump in late July, which handed enforcement powers entirely to the Justice Department and banned state attorneys general from intervening. Because the attorney general is appointed by the president, some lawmakers seek an enforcement mechanism that relies less on the executive branch.

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This moral controversy is no longer just a political side issue. It could determine whether the Senate can muster 60 votes to pass the United States 'first comprehensive cryptocurrency market structure bill, which will affect the way exchanges, token issuers and other digital asset companies are regulated.

Will an ethics agreement help or hinder passage of the bill?

The unique dilemma facing lawmakers is that a rule designed to separate Trump from the crypto business could also create tax benefits for him. That could complicate negotiations because Democrats seeking to strengthen moral protections could face criticism if the mechanism brings favorable tax treatment to the president. For supporters of the clause, the core goal remains to eliminate conflicts of interest between presidential decisions and private crypto asset holdings. For opponents, the possibility of huge tax deferral raises questions: Does forced divestiture achieve its goal while creating another financial advantage?

Ethics issues are just one obstacle facing the Clarification Act. Republican support for other parts of the bill has also waned. Senator Josh Hawley, R-Missouri, said he would not support the legislation unless the risk of deposits being lost from banks was revised. Senators John Cornyn, Republican of Texas, John Curtis, Republican of Utah, Mike Lowndes, Republican of South Dakota, and James Rankford, Republican of Oklahoma, also raised concerns about deposit outflows and stablecoin gains terms. Negotiators are also handling differences over decentralized finance separately, adding another hurdle for Senate leaders before a final vote.

Does Congress still have time to advance the encryption bill?

The legislative agenda has become one of the biggest threats to the Clarity Act. Senate Majority Leader John Thune said late Thursday that the bill would be considered after senators end their August recess, postponing the next vote until mid-September. As of Thursday afternoon, Senator John Thune, Republican of South Dakota and Senate Majority Leader, had not filed a motion to close debate, a procedural step the Senate must follow before a final vote. Filing a motion to close debate before the recess would allow the first procedural vote to be held as early as September 15; filing after the recess would delay this step until September 16. The possibility of senators staying in Washington for the weekend or next week is no longer the expected path. Thun said the bill would be placed on the agenda when the Senate resumes, leaving negotiators a full August recess to resolve differences over ethics, decentralized finance and other provisions for a possible vote in mid-September. Even if the Senate passes it, it will not be the end. Any amendment must go back to the House for a second vote before it can be delivered to Trump's desk. As a result, passage of the bill was delayed rather than being voted on immediately before recess. Lawmakers now have time until the Senate resumes in September to resolve moral disputes, maintain Republican support and muster enough Democratic votes. The proposed Trump spin-off rules could still determine whether the Clarification Act can make progress when it is reconsidered in the Senate.