The future of U.S. crypto regulation has entered a critical phase, and the highly anticipated CLARITY Act is now facing fresh roadblocks just as lawmakers race against the clock. In this update, we dive into the latest CLARITY Act News and what it means for the industry.
According to journalist Eleanor Terrett, a coalition of four law enforcement organizations has sent a letter to administration officials raising serious concerns about parts of the legislation, particularly Section 604, also known as the Blockchain Regulatory Certainty Act (BRCA).
Law Enforcement Raises Red Flags
The groups argue that Section 604 could create gaps in oversight and accountability, making it harder for authorities to investigate and prosecute crypto-related crimes. They also claim the bill does not go far enough in applying safeguards commonly required of traditional financial institutions and could exempt certain crypto participants from Know Your Customer (KYC) and Anti-Money Laundering (AML) reporting obligations.
According to Senator Cynthia Lummis “The Clarity Act is clear: writing code is not money transmission. That distinction will matter for a generation of builders.”
Lummis said the CLARITY Act makes clear that writing software code should not be treated as money transmission, arguing that the distinction could provide long-term regulatory certainty for crypto developers and blockchain builders.
However, these concerns come after weeks of negotiations involving Congress, the White House, law enforcement agencies, and crypto industry representatives.
Notably, the National Fraternal Order of Police and the National Association of Police Organizations, both deeply involved in discussions, did not sign the latest letter.
Senate Talks Stall, CLARITY Act Faces Tougher Path
- Senate negotiations broke down over ethics rules and Section 604.
- A private meeting involving Senators Kirsten Gillibrand, Ruben Gallego, Bernie Moreno, and Cynthia Lummis ended without a deal.
- Republicans and White House officials withdrew a proposal that would let state attorneys general challenge ethics enforcement tied to President Trump’s crypto interests.
- Democrats rejected an alternative plan that would give enforcement power only to the U.S. Attorney General.
- Law enforcement groups continue to oppose Section 604, creating another obstacle.
- So it’s gone beyond law enforcement as now Catholic organizations have formally urged Senate leaders to review H.R. 3633, the Digital Asset Market Clarity Act.
- Their main concern is that provisions in Section 604 could create regulatory gaps that weaken protections against illicit finance.
What’s next?
- According to crypto analyst Michaël van de Poppe, July 17 is the next key date for the CLARITY Act.
- The CLARITY Act needs 60 votes to pass the Senate.
- Republicans will likely need support from at least seven Democrats.
- Some Democrats who previously backed the bill say they still have unresolved concerns.
- Confidence is slipping, with Polymarket odds of passage falling to 48%, down from 74% a month ago.
