Senate ignores CLARITY Act; $TRUMP dinner revives ‘ethics’ issue

April showers might bring May flowers, but can they bring a digital asset market structure bill out of the U.S. Senate Banking Committee and onto the Senate floor for a vote?

On March 12, Punchbowl News quoted Senate Majority Leader John Thune (R-SD) saying he didn’t expect the CLARITY Act to “come out of the Banking Committee soon, probably not before, I would say, the April time period.” For the time being, Thune’s focus is squarely on the SAVE America Act, the voting identification bill championed by President Donald Trump.

CLARITY has been in a holding pattern for two months, following the Coinbase (NASDAQ: COIN) exchange withdrawing its support unless CEO Brian Armstrong got a guarantee that his platform can continue to offer ‘rewards’ to stablecoin holders. Opposing this plan is the banking sector, which wants CLARITY to prohibit crypto platforms from offering these rewards, much like the GENIUS Act prohibits stablecoin issuers from doing likewise.

Trump has vowed not to sign any bill until SAVE is approved and sent to his desk, but Thune insists he doesn’t have the votes to pass SAVE. So Thune plans to engage in some political theater by holding a marathon debate on SAVE that starts Tuesday and could reportedly take up to two weeks of the Senate’s dwindling legislative calendar.

On March 14, Alex Thorn, head of research at Galaxy Digital (NASDAQ: GLXY), tweeted that “if CLARITY doesn’t pass committee by end of April, odds of passage in 2026 become extremely low. This needs to hit the Senate floor by early May… floor time is running out and odds diminish every day that passes.”

The ticking clock is due to the November midterm elections and the fact that Congress will start reducing its workload earlier than usual, so pols can hit the campaign trail. Efforts to resolve the ‘yield v reward’ issue are ongoing, but both sides appear equally unwilling to budge. And as Thorn noted, while stablecoins have sucked up all the CLARITY oxygen, other obstacles to passage remain (more on this in a bit).

While Trump has attempted to force the stablecoin issue by blaming banks for the impasse, both his commitment and his attention span are notoriously fickle. For instance, last week saw the Senate approve a housing bill in response to an executive order Trump issued in January. But when the House of Representatives expressed reservations over some of the bill’s text, Trump reportedly told House Speaker Mike Johnson, “No one gives a [bleep] about housing.”

One of the objections some House members had ;to the housing bill was its language prohibiting the federal government from issuing a central bank digital currency (CBDC). The CBDC language had a sunset clause that expired on December 31, 2020, and while Sen. Ted Cruz (R-TX) tried (and failed) to amend the bill to make the ban permanent, he hopes the House can make the change during the conference process.

$TRUMP dinner, the sequel

The other obstacles that could trip up CLARITY before it crosses the finish line include the unresolved issue over whether decentralized finance (DeFi) developers should be held legally liable when their platforms are used by bad actors to commit crimes.

And then there’s the ‘ethics’ issue, aka Democrats’ insistence that CLARITY include language barring elected officials—including President Trump—and their families from profiting off crypto ventures. (Trump is vehemently opposed to any such language.)

As if on cue, on March 12, the team behind the president’s $TRUMP memecoin tweeted the announcement of a Conference & Gala Luncheon at the president’s Mar-a-Lago estate in Florida on Saturday, April 25.

As with last year’s $TRUMP dinner at the president’s Virginia golf club, luncheon attendance will be limited to the largest holders of the memecoin, so the more $TRUMP you buy, the better your chance of getting through the door.  (Controversial then, perhaps even more controversial now.)

Last year’s dinner welcomed the top 220 $TRUMP whales, but the April luncheon will see the top 297 holders get an invite. The top 29 $TRUMP holders will also be invited to a VIP reception with the president, although his appearance at last year’s event was something of a drive-by, and Trump is scheduled to attend the White House Correspondents Dinner in D.C. that evening. The promotion makes it clear that no one will get a “private meeting” with the president. Also, no gifts (apparently, buying his utility-free token is enough).

Unlike last year’s dine-and-dash, the April event is promising an actual “crypto & business conference” featuring “18 of the World’s Most Influential SUPERSTARS.” None of these “18 Global Giants” were identified by name, but we’re guessing Trump crypto critic Sen. Elizabeth Warren (D-MA)—the ranking member of the Banking committee, who called last year’s dinner “an orgy of corruption”—isn’t one of them.

Cynics will note that $TRUMP was trading at its all-time low ($2.73) shortly before last week’s announcement, but the news sent the price spiking to $4.25. Some opportunistic selling dropped the price back down to $3.75 before briefly spiking again and eventually coming to rest (for the time being) around $3.80 as of Monday evening.

$TRUMP launched in January 2025 at a price of $10, quickly soared to over $73 before just as quickly tumbling into the single-digit range. It’s worth remembering that $TRUMP enjoyed a similar (and similarly brief) surge following the announcement of last year’s contest, doubling from $7.50, but it hasn’t traded above $10 since last July.

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Senate v Binance

Some other Trump crypto ventures have ties to the Binance exchange, which continues to deny reports of its alleged dismissal of compliance staffers who sounded the alarm over possible Iran-linked sanctions violations.

On March 12, three Democratic members of the Senate Banking Committee issued a statement regarding last week’s Wall Street Journal report that the Department of Justice (DoJ) was “investigating Iran’s use of Binance to evade U.S. sanctions.”

The senators, who previously joined the other eight Dem Banking members in urging Attorney General Pam Bondi and Treasury Secretary Scott Bessent to conduct “a comprehensive review” of Binance’s sanctions compliance, insisted that they themselves will “will conduct oversight to ensure the Department of Justice conducts a serious investigation into Binance and holds the company accountable for any wrongdoing.” The trio noted Binance’s “established track record of putting profits ahead of the law.”

On March 12, Fortune published a follow-up article to its February 13 report, which included additional details on the Binance accounts that allegedly helped move over $1.7 billion in digital assets believed to be linked to sanctioned Iranian entities.

Fortune now says $439 million flowed through a single Binance VIP account belonging to a 79-year-old mainland China resident to digital wallets linked to Iran’s Islamic Revolutionary Guards Corps and other sanctioned entities. Despite the red flags, Fortune reported that Binance allowed the elderly VIP to “trade freely” between January and August 2025, until a Seychelles-based law enforcement agency sent Binance a request regarding “a serious case involving terrorism financing.”

At that point, Binance’s compliance team opened a case and discovered what they called a “Chinese nexus,” including a 38-year-old Chinese woman who sent $200 million to an intermediary wallet that forwarded the funds to Iranian-linked wallets.

Binance’s team reportedly discovered that both of these Chinese accounts “likely accessed Binance from the same device—suggesting the same person, or possibly a third party entity, controlled both accounts.”

There’s far more to this story, the details of which are too voluminous to include here. But Amanda Wick, a former U.S. prosecutor now working at compliance firm VerifyVASP, told Fortune that “in a scenario where multiple high-risk indicators converge … you would expect account restrictions, enhanced due diligence, blockchain tracing, and a sanctions risk assessment. These are the kinds of issues that should trigger action as they occur, not months after the fact.”

On Monday, Binance responded to the latest Fortune article with a blog post titled What the New Reports Got Wrong and What Our Compliance Program Actually Found. Binance claimed “[n]ew allegations have been made while old falsehoods have been recycled” in this “further inaccurate reporting.”

Last week, Binance sued the Wall Street Journal for “false and defamatory reporting” but has yet to file suit against either Fortune or the New York Times, which also reported on the allegations.

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SEC goes easy on BitClout

The Securities and Exchange Commission (SEC) has continued its pattern of divorcing itself from legacy litigation against crypto operators by dismissing (with prejudice) its civil complaint against blockchain-based social media platform BitClout.

In a joint stipulation to the U.S. District Court for the Southern District of New York, the SEC revealed that it was dropping its charges against BitClout founder Nader Al-Naji, two other defendants, and four BitClout-linked entities. The defendants agreed to waive any claim to legal or other fees associated with their defense against the SEC’s claims.

The SEC said it pulled this plug following “a reassessment of the evidentiary record relevant to certain of the Commission’s claims” in its July 2024 complaint. That complaint alleged that Al-Naji had violated unregistered securities rules by raising $257 million through the sale of BitClout’s native token BTCLT. Al-Naji was accused of spending over $7 million of this sum on personal luxuries.

On March 16, Al-Naji tweeted that the government “made a mistake in bringing this case” and he was now “completely and totally free to innovate and build again, unhobbled for the first time in years.”

The SEC’s dismissal followed the Department of Justice’s February 2025 decision to drop wire fraud charges (without prejudice) against Al-Naji. While the DoJ didn’t cite its rationale for dropping the charges, Al-Naji tweeted at the time that his “innocence withstood intense scrutiny” and “there was no victim” of his allegedly fraudulent activity.

The SEC’s dismissal came shortly after it settled its market manipulation suit against Tron founder Justin Sun, which saw a Sun-linked firm agree to pay $10 million without having to admit guilt. The SEC has now abandoned nearly all the crypto-focused litigation launched under its pre-Trump management.

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SEC talks innovation, tokenization

Meanwhile, the SEC has dropped more hints regarding its long-promised ‘innovation exemption’ for crypto firms. In a March 12 address to the SEC’s Investor Advisor Committee, SEC chair Paul Atkins said the proposed exemption would be “limited in time and scope, but long enough so that we can craft more durable rules that harness the full potential of these new technologies.”

Atkins previously suggested that the proposed exemptions would permit crypto operators to launch several products, including controversial initial coin offerings (ICOs), without first securing SEC approval. This loosening of restrictions is part of the SEC’s Project Crypto initiative, a key plank of the SEC’s desire to honor Trump’s policy recommendations.

In her own address to the committee, Commissioner Hester Peirce posed “several key questions” regarding how to implement an exemption policy that “both protects investors and enables firms to experiment and innovate with blockchain and tokenization technology.”

Peirce suggested that the SEC was working on an exemption for tokenized securities that was “much narrower than the ‘blanket’ exemption” mentioned in the committee’s draft recommendation. Peirce asked the committee to consider whether the SEC’s existing mandatory disclosure requirements for security issuers were so “insufficient” that new requirements are necessary for tokenized security issuers.

Peirce asked if the Committee believes broker-dealers and clearing agencies that tokenize security entitlements should be subject to new disclosure requirements, and if so, why? Ditto for atomic settlement of tokenized equity securities that allow settlement faster than the SEC’s existing T+1 settlement rules.

Peirce also wondered whether the SEC had statutory authority to impose regulatory requirements on tokenized security intermediaries and whether third parties seeking to issue tokenized securities needed the consent of the security’s actual issuer.

On Monday, Peirce told CNBC that tokenization-curious companies should “come in and talk to us … We want to work with you toward being able to experiment to see whether the market wants your products.” Legal and technical operational issues remain, “but we want to walk side-by-side with you as we think through those questions.”

Peirce was also asked about the SEC’s approach to highly leveraged exchange-traded funds (ETFs), which prompted a rare (at least, under the SEC’s current leadership) show of regulatory pushback last December.

Peirce said the SEC was “not a merit regulator,” but anyone looking to go beyond 2x leverage needed to come in and explain “how it is consistent” with existing SEC rules. Peirce added that the SEC wanted to make sure ETF sponsors are “disclosing what those products are, what the risks are, what they’re intended to be used for.”

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Custodia loses appeal of Fed master account denial

Finally, crypto-friendly Custodia Bank’s nearly six-year quest to obtain a U.S. Federal Reserve master account has once again come up empty. On March 13, the U.S. Court of Appeals for the Tenth Circuit rejected the bank’s request for a full court rehearing of the three-judge panel ruling last October that said the Fed had the discretion to reject master account applications as it sees fit.

While a 7-3 majority upheld the October rejection, Judge Timothy Tymkovich—the lone dissenting judge in the October panel’s 2-1 ruling—issued a dissent to this latest rejection. Tymkovich reiterated many of the views in his October dissent, including that the Fed is (we’re paraphrasing here) drunk on its own power and that the ruling gives Fed banks “a veto over states’ chartering power.”

Tymkovich warned that allowing the Fed “unreviewable discretion over master accounts places us on the wrong side of the statutes and, likely, that of the Constitution as well. The case’s consequences for the financial industry and its impact on the state-federal balance in banking regulation make it exceptionally important.”

Custodia has yet to publicly respond to its latest court setback, which has left it with only one legal option: appealing the matter to the U.S. Supreme Court. The fact that three judges dissented might interest the Supremes in establishing some overarching framework regarding digital assets and the Fed, but it may not matter in the long run.

Custodia holds a special-purpose depositary institution (SPDI) permit issued in the state of Wyoming, a status also held by the Kraken exchange since 2020. Earlier this month, Kraken made history by becoming the first recipient of a Fed ‘limited purpose account’ (previously described as ‘skinny’ master accounts focused on payments without many of the perks granted to full master account holders).

Kraken’s master account application was filed in October 2020, and Custodia filed its own application around the same time, meaning Custodia’s own ‘skinny’ account approval is likely imminent. In other words, Custodia may choose to save its legal fees to spend on champagne and balloons for when its long legal struggle comes to an end.

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