Several law enforcement associations have forwarded a letter to the Acting Attorney General of the US expressing concern regarding the CLARITY Act, crypto infrastructure legislation, and its impact on illicit activities.
While physical dollars have long been the preferred method of value transfer for criminals, the advent of crypto can speed up the transfer process of ill-gotten gains. While blockchains typically have a visible ledger showing the movement of crypto, it takes some effort to track and then potentially intercede when something bad happens.
The five signatories of the letter are the National District Attorneys Association, the National Association of Assistant United States Attorneys, the International Association of Chiefs of Police, and the National Sheriffs’ Association.
The letter states that the legislation’s current language, specifically Section 604, may create risks and impede enforcement efforts when crypto is involved.
“…our concern is with broad exemptions that may shield individuals or entities whose activities facilitate the movement of digital assets, create obstacles to legitimate oversight, or weaken longstanding investigative and enforcement authorities relied upon by law enforcement. Regulatory certainty should not come at the expense of accountability, transparency, victim protection, or public safety.”
Section 604 of the CLARITY Act provides a safe harbor for developers and open source software regarding users who may stray across the law and commit crimes. This is somewhat similar to not attacking a highway because a driver caused an accident, but it remains a debated aspect of the bill. Still, the legislation allows for the prosecution of anyone who knowingly breaks the law when using crypto.
The letter continues to dissect language which may allow “some decentralized finance (DeFi) businesses—from appropriate regulatory obligations despite the role such services can play in facilitating the movement or concealment of illicit funds.”
The group states that the CLARITY Act should balance innovation and accountability while not undermining the ability to combat illegal activities.
In a tacit response to these claims, Senator Cynthia Lummis, an advocate for digital asset innovation, posted on X that the Clarity Act is clear: writing code is not money transmission. That distinction will matter for a generation of builders. The Senator has long fought for the protection of developers and recently reposted a statement by Public Policy Solutions that “the Clarity Act will protect software developers and bolster American innovation by establishing a clear foundation for digital assets. Not just an economic boon, Clarity will also fortify national security and arm of the [US Department of Treasury] with tools to combat hostile foreign actors.”
