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President Trump’s $1.4-billion crypto windfall has become the biggest obstacle to passing his sweeping digital-asset legislation as Democrats demand tougher language to prevent the president from profiting off an industry his administration regulates.

Senate Republicans released a proposal this week intended to break a months-long impasse over the bill, known as the Clarity Act. But Democrats and consumer watchdog groups dismissed the terms almost immediately, complaining the bill would not stop Trump or his family from continuing to profit from his meme coin and other crypto ventures.

Trump needs the support of at least seven Senate Democrats to pass the legislation, which would set rules for digital assets. Ethics has emerged as the biggest, though not the only, sticking point.

“It’s the linchpin,” said Sen. Angela Alsobrooks, a Maryland Democrat and key negotiator who has been supportive of the crypto industry.

A spokesperson for the White House didn’t immediately respond to a request for comment. The White House has consistently asserted Trump is not involved in managing the family’s crypto ventures and has denied conflicts of interest.

Democrats have specifically taken issue with a provision that would leave Trump’s Justice Department as the primary enforcer of the new ethics regulations, preventing state attorneys general from acting as an independent check.

Another Democratic negotiator, Sen. Ruben Gallego of Arizona, and Republican Sen. Thom Tillis of North Carolina said they’re working on a compromise ethics proposal to send to the White House but didn’t provide details.

Senators in both parties said they see the negotiations in the coming week as key to whether a bill reaches Trump’s desk this year. But after the chilly initial reception to the latest White House offer, Senate Majority Leader John Thune (R-S.C.) said he didn’t think the Clarity Act would pass the chamber before the month-long August recess.

“We’ll see where the votes are,” Thune said.

Alsobrooks, Gallego and other crypto-friendly Democrats are demanding changes to other pieces of the massive bill, including consumer protection and illicit finance measures.

The bill has other issues, including opposition from banks intent on tightening restrictions on stablecoin rewards. Tillis and several other Republicans said they are considering backing changes to reflect banks’ concerns that their deposits could shift to stablecoin accounts, crimping their profits and customers’ access to credit.

Tillis has floated adding “circuit-breaker” language empowering the Federal Deposit Insurance Corp. or other regulators to step in if bank deposits drop — an idea opposed by GOP Sen. Cynthia Lummis of Wyoming, the crypto industry’s biggest backer in the chamber.

Porous provisions

Critics said the draft’s ethics protections are porous. It would let Trump divest a large stake in his crypto venture or move it into a blind trust for the rest of his term, but stops short of requiring him to sell.

“It’s going to allow him to keep making money the way he has in the past,” said Scott Greytak, deputy executive director of Transparency International US, an anti-corruption advocacy group.

The restrictions also hinge on whether an official has a “direct interest” in a crypto asset — a threshold that may not apply to Trump.

The president is a significant owner of World Liberty Financial, the Trump family’s crypto venture, through an entity called DT Marks DEFI LLC, which holds about a 38% stake. Whether that counts as a direct interest “isn’t clear,” said Zach Everson, research director for Public Citizen’s Trump Accountability Project. “Does direct interest describe how he holds the crypto?”

Because the bill wouldn’t apply to the children of government officials, Donald Trump Jr. and Eric Trump could continue their own crypto business interests. And much of the family’s fortune has already been made: Trump and his affiliates have earned a huge windfall from meme coin and token ventures, income the legislation would not claw back.

Critics also decried a provision that would sunset the ethics requirements on Jan. 20, 2029, the day Trump’s successor would be inaugurated. That could prevent the next administration from holding Trump accountable.

The White House and Republicans argued that Trump had gone further in backing ethics restrictions in law than any previous president.

“History will remember this as the moment a president chose a higher standard of ethics than the law required of him,” Lummis, a key architect of the bill, said on X.

Democrats were skeptical even before the language was released. “Any meaningful ethics provision would be shot down by the White House,” Sen. Chris Murphy of Connecticut said.

The politics of crypto have long divided Democrats, and a bipartisan deal on the legislation risks provoking a backlash from progressives. Failure to reach a deal, however, could make the party the target of a torrent of crypto campaign cash.

Crypto group Fairshake and its two affiliated super PACs have raised $164 million for the midterm elections, Federal Election Commission filings show, and have spent $66.6 million so far.

It’s the kind of political arsenal that Senate Democratic leader Chuck Schumer of New York can ill afford to have aimed at his candidates as the party seeks to regain Senate control.

But others, like Murphy, have warned that blessing Trump’s big crypto bill would undermine Democrats’ midterm message.

A potential presidential candidate, Murphy said Wednesday while addressing the left-leaning Center for American Progress that the bill is before the Senate “because the industry paid for it” and urged Democrats to instead turn fighting crypto corruption into a potent campaign issue this fall.

Markets have grown less convinced a deal gets done. On Polymarket, the odds of the Clarity Act passing this year fell to about 1 chance in 3 earlier this week after Republicans released the new draft.

That’s about half the odds the prediction market gave passage after the Senate Banking Committee backed an earlier version of the bill on May 14.

Dennis and Patterson write for Bloomberg. Bloomberg writers Yash Roy, Lydia Beyoud, Aidan Williams, Bill Allison and Olga Kharif contributed to this report.