The Clarity Act, the Senate's pending market structure bill for digital assets, gained a new bipartisan ethics provision this month when Republican Senator Thom Tillis and Democratic Senator Ruben Gallego delivered negotiated text to the White House, Punchbowl News reported.

The submission is a procedural step toward resolving one of the bill's most persistent roadblocks: President Trump's earlier endorsement of an ethics clause that alienated Democrats, according to Punchbowl.

What is the Tillis-Gallego ethics text?

The senators framed their proposal as a bipartisan compromise designed to neutralize the dispute over the ethics language Trump previously accepted. Punchbowl did not publish the full text, and the most detailed analysis of the bill's internal politics sits behind a paywall. The specific provisions of the new ethics text remain undisclosed in publicly available summaries.

The ethics fight is one of three fault lines running through the Clarity Act. The broader bill combines legal-clarity provisions for cryptocurrencies with tokenization rules and the disputed stablecoin interest provision.

Why are banks fighting the stablecoin rewards clause?

US banking associations have pressed lawmakers repeatedly to narrow or remove the Clarity Act's authorization for stablecoin issuers to pay interest or yield-equivalent rewards to holders. The bankers' central argument, repeated across multiple letters to Congress, is that such rewards would siphon retail deposits from commercial banks and erode the funding base for lending.

Punchbowl separately reported that a growing number of Republican senators now back the bank position. The shift marks a reversal for a caucus that initially supported the rewards language and complicates the bill's path to the floor.

What did Tillis propose as a compromise?

In mid-July, Tillis, the lawmaker who negotiated the rewards clause, floated a "circuit breaker" mechanism that would let federal supervisors intervene if data showed significant migration of bank deposits into stablecoins. Tillis pitched the idea publicly as a way to preserve the rewards provision while giving regulators a defined intervention threshold.

The concept borrows from supervisory authority that bank regulators already exercise over liquidity risk, though no formal endorsement of the Clarity Act version has been recorded publicly.

How does GENIUS interact with Clarity?

The most recent iteration of the Clarity Act carries amendments tied to the GENIUS Act, the separate stablecoin framework that advanced through the Senate earlier this year. The amendments aim to reconcile reserve, licensing, and definitional standards between the two bills.

Full technical text has not been released. The GENIUS Act addresses federal oversight of payment stablecoins; the Clarity Act governs market structure for other digital assets and the jurisdictional split between the SEC and the CFTC.

What happens next?

The White House's response to the Tillis-Gallego ethics text is the immediate gate. If the Office of the President signs off, the language returns to the Senate for a possible floor vote on the broader package. Banking groups have signaled continued pressure on the rewards clause ahead of any markup, and the circuit breaker proposal will require committee-level negotiation before incorporation into the final text.