CLARITY Act Criticized for Loopholes in Crypto Oversight

A coalition of law enforcement organizations and Catholic groups have sent letters to the U.S. government warning that a provision in the CLARITY Act would create crypto crime loopholes.

The letter, signed by four major law enforcement organizations and nearly 100 Catholic leaders, argued that Section 604 of the bill would weaken oversight tools used to combat financial crime.

Section 604 incorporates the Blockchain Regulatory Certainty Act (BRCA), which would exempt developers or infrastructure providers who cannot move or control user's digital assets from being considered money transmitters under federal law.

The groups, representing over 70,000 law enforcement professionals, contend that this exemption is too broad and could shield actors who facilitate the movement of digital assets while obstructing investigators.