Trump's Crypto Ethics Fix Comes with a Tax Break He Didn't Ask for

That's the twist sitting inside a bipartisan ethics counteroffer now before the White House, and it's not one either side appears to be arguing about yet. The fight over the provision has been entirely about enforcement. The tax consequence has gone largely unremarked.

What the counteroffer actually requires

Politico reported on 6 Aug that the counteroffer, drafted by Republican Senator Thom Tillis and Democratic Senator Ruben Gallego and sent to the White House the previous week, would force Trump and other federal officials to sell any stake in a digital-asset company worth more than $1mn that represents 10% or more of the firm's value. It targets companies that get most of their revenue from issuing or sponsoring digital assets.

That reaches Trump directly. His affiliated company, DT Marks DEFI LLC, owns approximately 38% of the equity interests in WLF Holdco LLC, the sole owner of World Liberty Financial, the crypto venture he launched with his sons, according to the company's own legal disclosures. Smaller stakes, above $15,000, would still require a blind trust or a sale. The rule would not bite immediately: Politico reported the ethics requirements would take effect a year after the bill becomes law, with a further six months to comply.

Why selling isn't the same as losing

The tax question sits underneath the sell-off rule rather than inside it. Under Section 1043 of the US tax code, officials forced to sell assets over a conflict of interest can apply for what's called a certificate of divestiture – essentially a note from the government letting them put off the tax bill, as long as they reinvest the proceeds into something diversified, such as a mutual fund, an ETF or Treasuries, within 60 days. It isn't a rule written just for crypto. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent both used it to offload their own pre-appointment holdings this term.

Without it, Trump would owe an immediate 20% capital gains tax on the gap between what he paid for his crypto and what he sells it for. With it, that bill simply moves into whatever he reinvests in – and if he holds those new positions until death, the gain is never taxed at all, since an asset's cost basis resets to market value at the owner's death. That shelters him from capital gains tax specifically. It says nothing about federal estate tax, which applies at 40% to estates above a $15mn exemption – a threshold Trump's overall estate would almost certainly clear regardless of what happens to his crypto holdings. Bloomberg, citing people familiar with the negotiations, reported that a forced sale under this specific provision could let Trump put off the capital gains tax "potentially for years – if ever." Trump's own June disclosure showed $1.4bn in income from crypto and memecoin ventures in 2025, his largest income source that year.

The fight is happening somewhere else entirely

Neither side has raised the tax question publicly. What has stalled the CLARITY Act is who enforces the rule, not what the rule does to Trump's tax bill. The counteroffer would let state attorneys general sue the Department of Justice (DOJ) if it fails to enforce the ethics requirements, and sue exchanges that list assets in violation of them. Democrats say they don't trust a Trump-run DOJ to police the president's own compliance; Republicans have resisted a state role, arguing it invites politically motivated litigation.

That framing may not survive contact with the tax question. Gallego said the deal "ends Trump's crypto grift by requiring him to divest and stops him from making one dollar more from his rug pulls" – a claim that gets harder to make once being forced to sell comes with a tax benefit ordinary sellers, including crypto holders forced to liquidate in a crash or a hack, never get. Tillis, for his part, said he would "vote to get on the [CLARITY Act]... but won't support final passage without a bipartisan ethics agreement."

What it means for the bill

The White House had not responded to the counteroffer as of early 7 Aug, and the Senate has already pushed its vote past the August recess to September. Both sides are selling this as the moment Trump stops profiting from crypto. Neither has grappled publicly with what the rule actually costs him: control of the stake, but not necessarily its value.