Law Enforcement Warns CLARITY Act Could Weaken Crypto Crime Oversight

Law enforcement groups are warning that Section 604 of the CLARITY Act could weaken oversight of crypto activity tied to crime. The section, also known as the Blockchain Regulatory Certainty Act, aims to protect non-controlling blockchain developers and infrastructure providers from being treated as money transmitters.

The four law enforcement organizations sent a letter to Acting Attorney General Todd Blanche and White House crypto adviser Patrick Witt expressing concerns that the current language could create gaps in accountability and make investigations harder. They argue that the bill does not clearly draw the line between neutral software development and activity that functionally helps move funds or support illicit finance.

The National Sheriffs' Association, Fraternal Order of Police, National Association of Police Organizations, and other groups have been pushing for changes to the provision. They claim that overly broad language could give bad actors a legal shield if they can present themselves as non-controlling software providers.