BPI Slams CLARITY Act as 'Illicit Finance-Friendly'

The Bank Policy Institute (BPI) has come out against the CLARITY Act, calling it 'illicit finance-friendly' in a policy update published on June 19. The BPI argues that the proposed crypto market structure bill leaves significant gaps across decentralized finance and other digital asset services.

According to the BPI, the legislation would create a 'lighter-touch AML regime' by applying anti-money laundering obligations only to certain digital asset brokers, dealers, and exchanges, while leaving other parts of the crypto ecosystem outside the framework. This includes decentralized finance providers, unhosted wallets, and certain digital asset service providers.

The BPI claims that this approach would make parts of the crypto ecosystem more attractive to illicit actors seeking to avoid law enforcement scrutiny. The group is urging Congress to subject all digital asset service providers and DeFi platforms to anti-money laundering and sanctions compliance requirements.