US Law Enforcement and Catholic Groups Raise Concerns Over CLARITY Act

The CLARITY Act is intended to establish a US digital-asset market framework. The dispute centers on Section 604, which protects noncustodial developers from automatically being treated as money transmitters. Law enforcement groups fear the provision could weaken know-your-customer and anti-money-laundering controls, as well as efforts to trace funds linked to human trafficking. The debate has raised questions about whether the bill can balance innovation, accountability and public safety.

On June 23, 2026, four law enforcement organizations, including the National District Attorneys Association, wrote to Acting Attorney General Todd Blanche and White House adviser Patrick Witt. An anti-human-trafficking coalition separately rallied 82 Catholic leaders. On July 4, the Major County Sheriffs of America withdrew its opposition and adopted a neutral position, while continuing to demand that state and local law enforcement agencies be included in Section 309. A hearing on the bill was scheduled for July 17 at the time.