A coalition representing more than 70,000 U.S. law enforcement professionals sent a letter on June 23 urging federal officials to revise provisions in the Digital Asset Market Clarity Act (CLARITY Act). The letter, signed by leaders of 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, was addressed to Acting Attorney General Todd Blanche and Patrick J. Witt, executive director of the President's Council of Advisors for Digital Assets. The organizations argued that Section 604 of the CLARITY Act could create broad exemptions that weaken transparency, accountability, and existing investigative authorities used in cases involving digital assets. The coalition stated concerns stem from the increasing appearance of digital assets in investigations involving narcotics trafficking, fraud, child exploitation, ransomware attacks, sanctions evasion, and terrorism financing. The letter represents an intervention in the ongoing debate over balancing responsible innovation in digital asset markets with law enforcement's ability to investigate crimes and protect public safety.
Coalition Identifies Section 604 Exemption Concerns
The organizations focused their critique 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 coalition argued that such exemptions could create gaps in oversight and accountability that sophisticated criminal actors may exploit. The letter stated that the organizations thanked the Administration for engaging with law enforcement while arguing that principal concerns remain unresolved. Rather than opposing the legislation outright, the coalition concentrated on specific provisions they said require revision.
The organizations wrote in the letter: "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."
Organizations Call for Preserving Bank Secrecy Act and AML Requirements
The coalition argued that no class of market participant should receive a blanket exemption from registration, know-your-customer (KYC), Bank Secrecy Act (BSA), or anti-money laundering and countering the financing of terrorism (AML/CFT) requirements. The organizations stated that 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.
The letter specifically identified mixers, tumblers, and certain decentralized finance businesses as categories that could be exempted or excluded from regulatory obligations despite their potential role in facilitating the movement or concealment of illicit funds. The coalition argued that the CLARITY Act 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 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."
Coalition Requests Continued Engagement on CLARITY Act Refinements
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. The coalition argued that any long-term regulatory framework should preserve transparency, accountability, and investigative authorities while allowing innovation to continue. The letter emphasized that the concern is not directed at individuals who merely write or publish software code, but rather at market participants who could receive broad exemptions from regulatory obligations.
FAQ
What did the law enforcement coalition request in the June 23 letter?
The coalition of more than 70,000 U.S. law enforcement professionals requested that federal officials revise provisions in the CLARITY Act, specifically Section 604, which they argued could create broad exemptions that weaken transparency, accountability, and existing investigative authorities used in digital asset crime investigations.
Which organizations signed the letter addressed to federal officials?
The letter was signed by leaders of 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, collectively representing prosecutors, sheriffs, chiefs of police, criminal investigators, deputies, officers, and other law enforcement professionals across the United States.
Why does the coalition oppose blanket exemptions in the CLARITY Act?
The organizations argued that blanket exemptions from registration, know-your-customer, Bank Secrecy Act, or anti-money laundering requirements could create gaps in oversight and accountability that sophisticated criminal actors may exploit, particularly as digital assets increasingly appear in investigations involving narcotics trafficking, fraud, child exploitation, ransomware attacks, sanctions evasion, and terrorism financing.
