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Clarity Act stalls as Warren demands SEC probe into Trump's $TRUMP memecoin
Senators Elizabeth Warren and Richard Blumenthal requested the SEC investigate President Trump's $TRUMP memecoin, which resulted in $3.8 billion in losses across nearly a million investors. The probe request comes as negotiations over an ethics provision in the Digital Asset Market Clarity Act have stalled, with the White House yet to respond to a tougher version sent by bipartisan senators last week.
A major crypto market structure bill is frozen in its final week before Senate recess, trapped by a standoff over whether government officials can hold digital assets. Senators Elizabeth Warren and Richard Blumenthal sent a letter to SEC Chairman Paul Atkins on Monday requesting an investigation into President Trump's $TRUMP memecoin, according to CoinDesk's reporting, escalating pressure on the White House to sign off on a tougher ethics provision in the Digital Asset Market Clarity Act.
The $TRUMP token has become the focal point of that standoff. According to the lawmakers' letter, the memecoin resulted in $3.8 billion in losses from nearly a million investors, while Trump's recent financial disclosure indicated he made $636 million from the token. The $TRUMP coin peaked above $46 per token and has since fallen to $1.47, per CoinDesk's reporting.
The contentious ethics section of the Clarity Act would ban senior government officials from direct involvement in crypto projects. Trump recently agreed to be subjected to a limit on crypto involvement, though the restrictions would have very narrow practical effect, according to CoinDesk. Democrats refused that narrow approach and said they would oppose the legislation unless the ethics provision was made stronger. Senators Thom Tillis, a Republican, and Ruben Gallego, a Democrat, negotiated a tougher ethics provision version and sent it to the White House last week. As of the time of reporting, the White House had not yet responded.
The timing is critical. Senate Majority Leader John Thune planned to begin the Senate voting process for the Clarity Act this week, per CoinDesk. If a new agreement is not quickly struck that convinces at least 10 Democrats to support the bill, the Senate voting process could lead to a fatal defeat of the Clarity Act.
Yet the SEC's own position may complicate the Warren-Blumenthal request. The SEC declared that memecoins have "limited or no use or functionality" and do not check a box as securities under the law, according to CoinDesk. This prior determination suggests the agency may face a legal barrier to investigating $TRUMP as a security.
Warren, the top minority-party member of the Senate Banking Committee, has been outside the formal negotiations over the Clarity Act, which she has steadily opposed, per CoinDesk's reporting. The letter states: "The SEC must be willing to enforce the law even when potential wrongdoers include those with powerful political connections." The request is characterized as likely to pack more political needling than actual regulatory results, according to the reporting.
Trump's financial disclosure showed $636 million in gains from the $TRUMP token, which peaked above $46 and has since declined to $1.47.
Watch whether the White House responds to the revised ethics provision this week, and whether that response satisfies enough Democrats to clear the 10-vote hurdle before Thune's planned floor vote. If the SEC declines to investigate on the grounds that memecoins fall outside its jurisdiction, the Warren-Blumenthal request will have served as pressure rather than enforcement, leaving the ethics provision as the only lever Democrats have.
And that's the way it is.
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