Law Enforcement and Catholic Groups Warn CLARITY Act Could Create Crypto Crime Loopholes

Four major law enforcement groups and nearly 100 Catholic leaders sent letters warning that Section 604 of the CLARITY Act could exempt crypto developers from money transmitter rules, creating gaps in anti-money laundering oversight.

• The National District Attorneys Association, IACP, and other groups representing 70,000+ law enforcement professionals signed the letter.
• Section 604 would exempt developers who cannot control user assets from money transmitter rules, which critics say is too broad.
• Catholic leaders warned the bill could make it harder to trace financial flows tied to human trafficking and organized crime.
• The CLARITY Act (H.R. 3633) passed the House 294-134 in July 2025 and cleared the Senate Banking Committee 15-9 in May 2026.
• A July 17 hearing on the bill has been scheduled in New York.

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