---
title: "Catholic Leaders and Police Groups Press Senate to Tighten Crypto's CLARITY Act"
description: "Nearly 100 Catholic leaders and four national law-enforcement associations are urging the Senate to strengthen the CLARITY Act, the crypto market-structure bill, warning that one provision could weaken safeguards against money laundering and human trafficking. Sponsors and the White House call the measure 'pro-law enforcement.'"
category: "Crypto"
category_url: https://boursel.com/category/crypto
author: "Priya Venkatesan"
published: 2026-06-24T06:30:00.000Z
updated: 2026-06-24T06:30:00.000Z
canonical: https://boursel.com/article/clarity-act-crypto-illicit-finance-challenge
tags: ["clarity-act", "crypto-regulation", "sec", "cftc", "anti-money-laundering"]
---
# Catholic Leaders and Police Groups Press Senate to Tighten Crypto's CLARITY Act

Nearly 100 Catholic leaders and four national law-enforcement associations are urging the Senate to strengthen the CLARITY Act, the crypto market-structure bill, warning that one provision could weaken safeguards against money laundering and human trafficking. Sponsors and the White House call the measure 'pro-law enforcement.'

A coalition of Catholic organizations and U.S. law-enforcement groups is pressing the Senate to amend the Digital Asset Market Clarity (CLARITY) Act, arguing that the crypto market-structure bill could open loopholes for illicit finance even as the cryptocurrency industry and the White House defend it.

## What the bill does

The CLARITY Act, formally [H.R. 3633](https://www.congress.gov/bill/119th-congress/house-bill/3633), is Congress's attempt to settle a long-running turf question: which federal agency polices digital assets. "Market structure" refers to the rules governing how an asset is issued, traded and supervised. The bill would give the Commodity Futures Trading Commission (CFTC) jurisdiction over spot markets for "digital commodities," while leaving the Securities and Exchange Commission (SEC) in charge of assets sold as investment contracts. In practice, securities face stricter disclosure and registration rules at the SEC; commodities fall under the CFTC's lighter-touch regime.

The House passed the bill 294-134 in July 2025, with dozens of Democrats joining Republicans. The Senate Banking Committee advanced its own version in May 2026, but a floor vote would need 60 votes to clear a filibuster — and reporting suggests that support has grown shakier as the opposition widens.

## The objection

The central dispute is Section 604, which incorporates the Blockchain Regulatory Certainty Act. It creates a "safe harbor" clarifying that non-custodial software developers — those who write code but never hold users' funds — are not legally "money transmitters," a designation that triggers Know-Your-Customer (KYC) and anti-money-laundering (AML) obligations.

Critics say that carve-out is too broad. Four groups — 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 — warned the provision could create oversight gaps and strip prosecutors of statutes used to track criminals, [per crypto.news](https://crypto.news/clarity-act-faces-trafficking-backlash-as-senate-vote-nears/).

Separately, nearly 100 Catholic leaders wrote to Senate leaders John Thune and Chuck Schumer, [The Block reported](https://www.theblock.co/post/405868/clarity-act-new-opposition-catholic-leaders-weakened-safeguards-against-illicit-finance). The Alliance to End Human Trafficking, founded by U.S. Catholic sisters, said Section 604 "could create broad carveouts and regulatory ambiguities" that complicate efforts to monitor financial activity tied to trafficking, organized crime and sanctions evasion, while affirming support for "responsible innovation."

The concern, in plain terms: if the people building crypto tools are exempt from monitoring duties that banks face, investigators may lose visibility into how criminal proceeds move on blockchain networks.

## The defense

Sponsors and industry groups say the provision is narrow. Lindsay Fraser, chief policy officer at the Blockchain Association, said Section 604 "does one narrow thing" — shielding non-custodial developers from misclassification — and "does not immunize criminals" or limit sanctions enforcement, [Cointelegraph reported](https://cointelegraph.com/news/law-enforcement-and-catholic-groups-warn-clarity-act-facilitates-crypto-crime). Patrick Witt, the White House's top crypto adviser, called the measure "a pro-law enforcement bill," [The Block noted](https://www.theblock.co/post/403693/white-house-crypto-adviser-witt-defends-clarity-act-calls-it-pro-law-enforcement-as-lawmakers-race-to-pass-bill), saying lawmakers added language responding to such concerns.

With the bill's Senate odds now in doubt, the question is whether sponsors tighten Section 604 to win back wavering support — or whether the objections stall a measure the industry has spent years pushing toward the finish line.