A coalition comprising four prominent law enforcement organizations and a separate assembly of nearly 100 Catholic leaders has recently sent letters to the U.S. government, highlighting concerns that a provision within the Digital Asset Market Clarity Act could undermine the investigative and prosecutorial tools essential for combating financial crime.
The correspondence, addressed to Acting Attorney General Todd Blanche and Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, originated from the National District Attorneys Association, the National Association of Assistant United States Attorneys, the International Association of Chiefs of Police, and the National Sheriffs’ Association.
Collectively, these associations represent over 70,000 professionals, including prosecutors, sheriffs, police chiefs, and investigators in the law enforcement community.
The primary concern articulated by these organizations pertains to Section 604 of the proposed legislation, which integrates the Blockchain Regulatory Certainty Act (BRCA). This provision seeks to stipulate that a developer or infrastructure provider, who is unable to control a user’s digital assets, should not be classified as a money transmitter under federal law.
While proponents assert that such language is critical for safeguarding software developers from criminal liability, law enforcement representatives contend that the proposed exemptions are excessively broad.
The organizations expressed in their letter, “As currently drafted, Section 604 risks creating gaps in oversight and accountability that could impede those efforts.” They further clarified that their concerns do not extend to individuals who simply write or publish software code, or to responsible technological innovation. Instead, they are worried about exemptions that might protect entities facilitating the transfer of digital assets while obstructing law enforcement investigations.
Additionally, the groups argue that the legislation is deficient in addressing anti-money laundering (AML) and counter-financing of terrorism mandates. They noted that it lacks the establishment of suspicious activity monitoring and reporting obligations that are comparable to those imposed on traditional financial intermediaries. There are also warnings that certain provisions could exempt mixers, tumblers, and specific decentralized finance entities from AML and know-your-customer requirements.
A separate letter, addressed to Senate Majority Leader John Thune and Senate Democratic Leader Charles Schumer, was signed by approximately 80 organizations and leaders, including the Alliance to End Human Trafficking, the Jesuit Conference’s Office of Justice and Ecology, and numerous Catholic sisters and survivor advocates.
The signatories caution, “Human traffickers are quick to exploit new technologies when oversight fails to keep pace,” emphasizing that the regulatory gaps inherent in the bill could complicate efforts to trace financial flows associated with trafficking, child exploitation, and organized crime.
Background: Objectives of the CLARITY Act
H.R. 3633, known as the Digital Asset Market Clarity Act, represents the most significant advance in cryptocurrency legislation in Congress in recent years. The House passed the bill with a vote of 294-134 in July 2025. Following this, the Senate Banking Committee approved the bill with a 15-9 vote in May 2026, allowing it to be placed on the Senate Legislative Calendar for a floor vote.
This legislation seeks to delineate the oversight responsibilities for digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), thereby creating a regulatory framework for cryptocurrency exchanges, brokers, stablecoin issuers, and participants in decentralized finance.
The Trump administration has prioritized this legislation, with industry groups advocating for the preservation of Section 604’s protections for developers.
To secure advancement in the Senate, the bill requires 60 votes, a threshold that affords moderate Democrats considerable influence. Senators Mark Warner of Virginia and Catherine Cortez Masto of Nevada have conditioned their support on obtaining law enforcement’s endorsement of Section 604, rendering the opposition letters a significant challenge to the bill’s future.
On July 17, Congress has scheduled a hearing in New York regarding the CLARITY Act, which is poised to be a critical piece of legislation aimed at reestablishing the oversight of cryptocurrency markets. Lawmakers are moving forward with intentions of potential passage later in the year.
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