CLARITY Act Sparks High-Stakes Senate Battle Over Crypto Regulation

The CLARITY Act has gained momentum in the US Senate, but its fate remains unclear as it faces opposition from law enforcement and support from the crypto industry.

The Blockchain Association sent a letter to Senate Majority Leader John Thune on August 3, refuting claims that the bill would exempt decentralized finance (DeFi) platforms from anti-money laundering and sanctions requirements.

The association argued that Section 10604 of the act draws a distinction between those who exercise actual control over customer assets or transactions and software developers who provide neutral software. It also noted that existing criminal laws prohibiting money laundering, terrorism financing, wire fraud, sanctions evasion, conspiracy, and theft would remain applicable.

The law enforcement community has a mixed reception of the bill. The National Sheriffs' Association has promoted expanding the scope of the law to more participants, while some police and federal law enforcement support the bill's control-based regulatory framework.