Final Negotiations on Clarity Bill: Trump Tax Exemption vs. Strengthening Ethical Provisions

[Block Media Reporter Lee Jeong-hwa] The Senate vote on the Digital Asset Market Clarity Act is nearing final negotiations. Reports suggest that the possibility of processing in August is low, but it is known that the Republican and Democratic parties are attempting a dramatic "swap" negotiation.

This negotiation focuses on providing tax relief benefits to President Trump for the sale of digital asset businesses and granting strong independent enforcement authority to state attorneys general in case of violations.

Mandatory Sale of Trump’s Assets and Millions in Tax Benefits

According to local media such as Bloomberg, CoinDesk, and Politico on the 6th (local time), both parties have delivered an amendment to the ethical provisions to the White House. Politico reported that the amendment is opaque, making it virtually impossible to process in August. The main point of contention is a provision that requires President Trump to mandatorily sell his digital asset-related businesses and stakes to prevent conflicts of interest during his presidency.

President Donald Trump has invested in the digital asset venture "World Liberty Financial." A company affiliated with the president (DT Marks DEFI LLC) holds a 38% stake in this firm. Unlike other senior officials, the president is not required by law to sell assets during his term, but this amendment imposes a new obligation on President Donald Trump to sell his digital asset holdings.

However, a powerful benefit has been provided that allows the substantial federal capital gains tax to be deferred for years or until death in exchange for selling the assets. In fact, it has been reported that President Donald Trump is expected to earn about $1.4 billion through digital asset and meme coin-related ventures by 2025.

In a typical case, a 20% capital gains tax is imposed immediately upon asset sale, requiring the immediate payment of millions in taxes. However, by utilizing the benefits of this amendment, if the sale proceeds are reinvested in new investment opportunities and held until death, the capital gains tax can be permanently exempted.

This tax benefit mechanism applies the same special tax law provisions that cabinet officials such as Howard Lutnick and Scott Bessent, who have already disposed of assets, enjoyed to the president as well.

What Democrats Gain by Concessions: Independent Litigation Authority for State Attorneys General

To garner support from Democratic lawmakers who have consistently advocated for stronger digital asset regulations, this amendment includes a powerful oversight mechanism that can bypass federal authority.

The amendment grants state attorneys general the authority to independently file lawsuits to enforce ethical provisions, even if the federal Department of Justice refuses to prosecute or file lawsuits for violations of digital asset ethical regulations by high-ranking officials. This is a measure to fundamentally block the possibility of passive responses from federal judicial authorities.

This bipartisan compromise was officially delivered to the White House by Republican Senator Thom Tillis and Democratic Senator Ruben Gallego, and the White House has begun serious review and discussion.

Dramatic Compromise Before Senate Recess or Schedule Delay?

The U.S. Senate is currently facing severe scheduling pressure just before the summer recess. In addition to the Clarity Bill, urgent issues such as the confirmation of Todd Blanche as Attorney General and the federal budget bill, as well as sanctions against Russia, are piling up.

Politico reported that the Republican Senate leadership would enter the August recess without conducting a vote on the Clarity Bill. The bill currently lacks the support of Democrats necessary for Senate passage. Since the Senate will recess until mid-September, if the bill is not processed in August, the resumption of serious discussions is likely to be pushed to the following month.

However, negotiations between the two parties are ongoing, so if a dramatic agreement is reached, there remains the possibility of schedule changes.

CoinDesk reported that the future fate of the Clarity Bill has been condensed into three scenarios.

The first is for Republican Senate Minority Leader John Thune to request cloture and quickly proceed with procedural votes to pass the bill before the recess.

The second scenario is to fail to reach a consensus on contentious issues, leading to a recess on August 7 and postponing discussions until the September session. However, concerns have been raised that the actual number of session days scheduled for September and October is only 14, making the schedule very tight.

The third scenario is for the Senate to extend the session into the weekend or next week to process the confirmation of Todd Blanche and handle the vote on the Clarity Bill simultaneously during this period.

Republican Senate Banking Committee Chairman Tim Scott stated in an interview with Fox Business, "We must complete the first vote on the Clarity Bill before the summer recess," asserting that there is enough time to vote on the bill even if the Senate delays the summer recess.

Chairman Scott further criticized, "Every time we make progress in negotiations, the Democrats keep moving the goalposts and employing intentional delay strategies."

This aligns with the remarks of Republican Senator Cynthia Lummis, who pointed out that "if the Clarity Bill fails, the responsibility lies with the Democrats."

Senate Minority Leader John Thune requested cloture on a college sports bill led by Senator Ted Cruz, but since an actual vote was not executed, there is still time to initiate the procedures for the Clarity Bill.

"The Key to Passing the Bill... The Final Decision Lies with the White House"

Political and blockchain industry experts analyze that this amendment to the ethical provisions is the most decisive key to the future fate of the Clarity Bill.

Eleanor Terrett, a reporter for Crypto in America, explained on social media that "digital asset policy stakeholders are still in a 'weird limbo.'"

Reporter Eleanor Terrett stated, "This week, key supporters of President Trump have been actively engaging with the White House to persuade them to agree to the ethical provision amendments."

A staff member from the Senate told CoinDesk in an interview, "If the remaining issues are resolved quickly, there is a high likelihood that the bill will pass smoothly within the September session," offering a positive outlook.

On the other hand, internal dissent within the Republican Party has also hindered progress, as Senator Josh Hawley has expressed opposition to the bill due to concerns over interest income leakage from stablecoins. Additionally, Senator Thom Tillis has warned that he will firmly vote against the bill if the bipartisan ethical provisions are not reflected in the final legislation.

Reflecting these difficulties, the prediction market Polymarket shows only a 17% probability that President Donald Trump will sign the Clarity Bill by the end of the year, indicating a very cautious trend.

Ultimately, experts predict that the feedback from the White House regarding the bipartisan compromise proposed by Senators Thom Tillis and Ruben Gallego will be the final turning point for the passage of the Clarity Bill.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.