More than 70,000 U.S. law enforcement professionals have urged federal officials to revise provisions of the CLARITY Act, warning that broad exemptions could weaken oversight, accountability, and investigative tools used to combat criminal activity involving digital assets.
Key Takeaways:
Law enforcement organizations urged federal officials to revise CLARITY Act provisions affecting digital asset oversight.The coalition argued Section 604 of the CLARITY Act could create broad exemptions that weaken transparency, accountability, and existing investigative authorities.The groups also called for preserving Bank Secrecy Act, know-your-customer, and anti-money laundering requirements across digital asset markets.A coalition representing more than 70,000 U.S. law enforcement professionals has stepped into the debate over the Digital Asset Market Clarity Act (CLARITY Act), urging federal officials to revise provisions they say could weaken the ability to investigate crimes involving digital assets.
The organizations wrote:
“The undersigned organizations support responsible innovation and share the goal of ensuring that the United States remains a global leader in emerging technologies and financial markets, but we also believe innovation and public safety are not mutually exclusive and can advance together.”
Addressed to Acting Attorney General Todd Blanche and Patrick J. Witt, executive director of the President’s Council of Advisors for Digital Assets, the letter thanked the Administration for engaging with law enforcement while arguing that its principal concerns remain unresolved.
Rather than opposing the legislation outright, the coalition focused on Section 604 of the CLARITY Act, contending that the provision could create broad exemptions that shield individuals or entities involved in facilitating digital asset transactions. The organizations argued that such exemptions could create gaps in oversight and accountability that sophisticated criminal actors may exploit.
CLARITY Act Dispute Centers on Oversight and ComplianceThe organizations said digital assets increasingly appear in investigations involving narcotics trafficking, fraud, child exploitation, ransomware attacks, sanctions evasion, terrorism financing, organized retail crime, and other forms of transnational criminal activity. Existing investigative authorities and regulatory frameworks, they argued, help investigators identify suspects, follow financial trails, recover illicit proceeds, and return assets to victims.
Section 604 has drawn the coalition’s strongest criticism. The letter argues that broad exemptions in the CLARITY Act could reduce transparency and accountability by excluding certain market participants from regulatory obligations that currently assist criminal investigations, while emphasizing that the concern is not directed at individuals who merely write or publish software code.
The organizations wrote:
“No class of market participant should receive a blanket exemption from registration, know-your-customer (KYC), Bank Secrecy Act (BSA), or AML/CFT requirements.”
The coalition also challenged other provisions of the CLARITY Act, arguing that parts of the legislation could weaken anti-money laundering and countering the financing of terrorism safeguards relied upon by investigators. The groups said the bill fails to establish a comprehensive set of compliance requirements comparable to those imposed on other financial intermediaries.
The four organizations urged continued engagement with the Administration, Congress, and other stakeholders to refine the CLARITY Act and develop a regulatory framework that promotes responsible innovation while preserving transparency, accountability, and investigative tools.
