Trump Backs Crypto Ethics Bill Allowing State Lawsuits

Three Republican authors of the bill claim Trump agreed to a substantial part of its ethics framework, according to The Associated Press, which first reported the development. The language in question would empower state attorneys general to initiate lawsuits against crypto exchanges directly, rather than leaving enforcement solely to federal regulators.

What the Bill Actually Restricts

The proposed legislation bans federal judges, federally elected officials, and their spouses from issuing digital assets, aiming to close off an obvious conflict-of-interest path. It also updates requirements for divestment or blind trusts when officials hold major financial interests in crypto-issuing entities.

On digital asset issuers specifically, the restrictions are meant to prevent the exact scenario critics have worried about since crypto entered mainstream political conversation: officials with regulatory power also holding a financial stake in the assets they’re supposed to oversee.

Why the White House Hesitated

A coalition of Democrats, joined by Senator Thom Tillis, argued the bill’s initial provision didn’t go far enough on conflict-of-interest concerns. They pushed for language allowing state attorneys general to enforce the law alongside the Justice Department, rather than leaving enforcement concentrated at the federal level.

The White House had privately pushed back on this idea. According to two individuals familiar with the discussions, officials worried Democratic state attorneys general could use the law against Republican officials, or that the reverse could happen just as easily once the enforcement door was opened.

Despite those reservations, a senior GOP aide says Trump approved about 80 percent of Tillis’s pitch, a proposal developed jointly with Senator Ruben Gallego. That approval reportedly includes the provision letting state attorneys general sue exchanges that list blocked digital assets, the exact mechanism the White House had initially resisted.

Where the Bill Stands Now

Senators Cynthia Lummis, Tim Scott, and John Boozman have affirmed that state attorneys general will play a meaningful role in the bill’s enforcement going forward. White House crypto adviser Patrick Witt has publicly pushed for the bill’s passage, noting that both the White House and Senate Republicans have been responsive to Democratic policy objectives throughout negotiations.

After more than a year’s worth of negotiations, it’s time to pass this bipartisan bill, Witt wrote in an X post published by AP News.

Hashlytics Take

The real story here isn’t the ethics restrictions themselves, most of that is fairly standard conflict-of-interest language. It’s that the White House initially resisted state-level enforcement specifically because it feared political retaliation through the courts, then reversed course anyway. That reversal suggests the pressure to pass something bipartisan on crypto ethics outweighed the risk calculus that had stalled the bill for over a year.

Whether state attorneys general actually use this power evenhandedly, or whether it becomes another front in partisan legal battles, is the part worth watching once this becomes law rather than a negotiating position.