Eleanor Terrett: CLARITY Act Passing in 2026 Is Not A Lost Cause (What Comes Next)

Transcript

They have to send that proposal though to the White House. Trump has to be okay with it. If he's not okay with it, there's no bill. >> Just like the streets of Manhattan, I'm going to keep this quick. Over 70% of our viewers are not [music] subscribers. Yes, you. Every week, we interview some of the best entrepreneurs and investors in the financial industry. The easiest way to support our channel is to hit the like and smash the [music] subscribe button. Now, sit back, relax, and enjoy today's show. >> Let's take these one by one, right? because there's ethics, there's yield, there's several other provisions, but let's start with ethics. This is the thing that's been on everyone's mind.

It's been the biggest holdup. [clears throat] What is happening with ethics? From the outside looking in, it seemed like they would prohibit people from participating in memecoins as fundraising mechanisms. Maybe you can just help articulate the ethics language and and tell us whether people on both sides of the aisle are satisfied with this language. >> Yeah. So, I'm going to pull up the exact text language. So, you know, I can give your audience maximum value here. But what essentially is happening right now behind the scenes is that that text did come out last Wednesday.

>> The Democrats perhaps, not surprisingly, came out against it because they say it's not satisfactory. They think it doesn't do enough to prevent President Trump from profiting off of his crypto ventures. really is sort of the the core issue here is President Trump has managed to make a lot of money while in office and you know the last 18 months he's made over a billion dollars >> and a lot of it has been from his memecoin from his involvement in World Liberty Financial which is his son's uh platform. >> Yep. >> All of this is very unprecedented as well. There's been no sort of um blueprint for this before. So a lot of this ethics language that lawyers have been working on, you know, staffers, people with like law degrees, you know, a million law degrees have found very

challenging because you're running into issues, you know, constitutional issues. You're kind of like coming up with a bespoke framework here. And then the the White House really has to be the one to sign off on it at the end of the day. So the White House did send over a framework to Senate Republicans. Senate Republicans said, "This looks okay." And then when they presented it to the Democrats, they said it does not go um as far as we want it to. Um the the headline, I suppose, I don't want to dig through my my Twitter to find the whole thing. >> Um is that you know it will prevent members of Congress, government officials, the president, the vice president, their spouses, members of Congress from issuing, sponsoring digital assets while in office. There is a sunset clause uh of 2029.

>> Yeah. >> So they cannot go beyond that. B basically they cannot enforce this beyond President Trump's presidency. Um it also uh it let me pull it up. >> I I guess [laughter] may maybe the best question here is what is lacking from the ethics language to satisfy Democrats right? >> What is what is missing there? >> That that was probably the second thing I was going to say is that it requires government um it requires the DOJ to be able to sue to enforce ethics provision. What the Democrats really want here is state attorneys general. They want a role for these state AGs to be able to sue to enforce sue the DOJ to enforce lapses in ethics provisions, right? The Republicans really don't want that.

President Trump, the White House really doesn't really don't want that. The the Democrats really do. And there's back and forth over like how that could look. Is it, you know, really feasible? That's sort of the the key tension point here. Senator Tom Telis is leading those discussions with Senator Ruben Ggo from Arizona. There may be a breakthrough in the next couple days. We'll have to see. Um they have to send that proposal though to the White House. Trump has to be okay with it. If he's not okay with it, there's no bill. >> Would you anticipate that let's say Republicans compromise with the Democrats and they say, "Sure, we'll we'll let the Senate or excuse me, the the state attorney general sue the DOJ in order to enforce these rules." How many lawsuits are like would do you anticipate that as soon as

the rules go through we would see this flurry of lawsuits from the state attorney generals given that if they are given that power >> potentially yes and you've seen a lot of state ages take it upon themselves to sue because they feel like they have that you know sort of like autonomous power right you look at Leticia James in in New York um she's sued a lot of crypto exchanges she sued like individuals um she doesn't necessarily like crypto it seems she's come out with a letter in the last couple days saying the Clarity Act should not pass. Um, state AGs have, you know, taken on these, uh, lawsuits that the SEC dropped after the, uh, you know, with the advent of the Trump administration, uh, a state AG out, I forget which state it was, but, they took on the same lawsuit

against Coinbase that the SEC dropped. >> And, you know, so you see, um, you see initiatives like that and you have to kind of think, well, you know, if that if that doesn't, you know, that doesn't war you, then this could potentially, you know, lead to lead to other things down the line. And I think Republican senators are worried that with the shoe on the other foot, you know, a Democrat administration potentially in the next couple of years. How is that going to look for us? >> Yeah, absolutely. I mean, it kind of goes both ways cuz if there was a Democratic administration and now they start using this uh as a fundraising mechanism or start, you know, finding some loopholes, could be the Republican state attorney general that go and sue.

So, >> Exactly. >> Yeah. We'll we'll see. We'll see how that plays out, but obviously we're sort of playing the game as it stands right now with the Republican administration and sort of putting rules together with this in place. Um, >> the Democrats are playing a key role here though because they are the ones that need to >> bring up the the vote count to 60, right? About you've got about 53 Republicans right now. They've got the leverage. You need about 10 Democrats to really get those those 60 votes. So, if you don't have those, you don't have a bill either. >> I spoke to Rebecca Retig of Reddic. She's fantastic. Um, she was explaining how the Clarity Act is a win for Democrats. They just don't realize it. We've been operating in this

unregulated environment, this wild west of crypto for so long. Um, Democrats are, you know, everyone wants consumer protections, these sorts of things. But for some reason, you know, Democrats are opposed to actually regulating this industry because it looks like it would legitimize the industry. And especially while the president, who's a Republican president, has benefited so much and made so much money from it, they don't want to be seen as legitimizing the industry. I also saw, I don't know if you saw this, this is a fascinating watch because we're so zoomed in on the industry.

>> You know, John Oliver, he's got like this Tonight Show. Yeah. Did you see the segment that he did yesterday? >> Okay. What did you think about this? I watched the whole thing. I thought it was fascinating, especially after hearing from Rebecca Reig who said that this was a bill that was going to be a win for Democrats. But then the narrative that is explained and uh you know put in front of the the the mainstream media, if you will, is that um Trump has made so much money from this from this industry. uh we should regulate the industry but the clarity act is not the way to do it. That was ultimately the conclusion that I think John Oliver was drawing and so I think that is sort of indicative of the narrative at at large at the moment. Is that the consensus view right now from

the outside looking in and do you think that's a fair assessment of of the clarity act? >> So I didn't watch the whole segment. I did watch a clip of it that came up on my X feed and yeah I did see the part where he said you know the clarity act is not the way to do this. I do think there's a lot of PTSD I will say from FTX especially among Democrats who took money from Sam Bankwood Freed >> gave time to Sam Bangman Freed who ended up being you know what he was and I think a lot of folks on the hill have not recovered from that and they see crypto as synonymous with FTX and with SPF and I think there's a world where they just can't see beyond that you know no matter what the industry does to maybe redeem itself to kind of you know

look beyond that time and grow and mature it's just not going to change a lot of these a lot of these folks minds. And I don't think it's just Democrats. I think there's some Republicans who also feel the same way. But to Rebecca's point, I think, you know, there are in this bill and as someone who's, you know, gone through the latest text, you know, there are things in there that would prevent another FTX. So, while Democrats can say, you know, we don't want this bill to enable crypto billionaires, right? That's a that's a common line. I think John Oliver might have even brought that up. And Ben McKenzie, the the OC actor, has been on the hill talking about this as well, saying, you know, do we really want to enable crypto billionaires to keep, you know, making more money than you. And then you know there there's that but

then there's also the world where you pass the Clarity Act and there are bankruptcy remoteness protections in there where if you know God forbid a crypto business or an exchange does fail and then customers actually get the same rights that they would if a traditional exchange or a traditional financial platform were to go into bankruptcy. So there are good things in the bill. There are things in the bill that people are not going to agree on. And you know it's unfortunately crypto has become a partisan issue. I think it is for all the for all the you know I won't say propaganda for all the messaging out there that crypto is a bipartisan issue.

>> Yeah. I think it it parts of it are and I think it's gotten better, but I think it will always be a partisan issue and I think FTX played a big role in