Catholic groups join law enforcement in opposing THIS CLARITY Act provision

The CLARITY Act, the U.S. crypto market structure bill, is drawing mounting scrutiny over its proposed legal exemptions for non‑custodial DeFi platforms. 

On the 24th of June, four law enforcement groups sent a letter to the White House and Department of Justice (DoJ) to express their concerns regarding the BRCA (Blockchain Regulatory Certainty Act) provisions. 

The groups include the National District Attorneys Associations (NDAA), the National Association of Assistant United States Attorneys (NAAUSA), the International Association of Chiefs of Police, and the National Sheriffs’ Association. These groups cover over 70K professionals. 

For those unfamiliar, Section 604 of the Blockchain Regulatory Certainty Act (BRCA) is designed to protect developers. It exempts them from needing a money transmitter license if the platform is fully non‑custodial, meaning developers do not control user funds. 

If passed in its current form, the bill would also shield developers from liability for fraud or money laundering committed by third parties on these platforms. Instead, regulators should go after the third-party perpetrators committing the crime, not developers, like in the Tornado Cash case. 

For the four groups, however, the exemptions could ‘impede’ investigative efforts in digital assets. 

As currently drafted, Section 604 risks creating gaps in oversight and accountability that could impede those efforts.

The group added that they are not against developers, but their concern is the ‘broad exemptions’ that could shield some wrongdoers. Worth noting that these groups have been involved in discussions with the White House over the same issue over the past few weeks. 

Catholic Church opposes CLARITY Act

Interestingly, beyond law enforcement, opposition has also come from about 100 coalitions of Catholic organisations and leaders.

They raised their concerns over Section 604 of the bill. According to the religious groups, the Section 604 provisions could weaken monitoring of human trafficking. 

Section 604 could create broad carveouts and regulatory ambiguities that make it more difficult to responsibly monitor illicit financial activity tied to trafficking, organized crime, child exploitation, sanction evasion, and other forms of abuse.

In other words, Section 604 is becoming a major sticking issue on the bill. Alongside ethics and stablecoin yield, these issues have delayed the introduction of the bill to a broader Senate floor vote. 

In other policy developments, Solana Policy Institute’s Kristin Smith has opposed the amendment by Rep. Steven Horsford (D-NV) on recently proposed crypto tax rules. The amendment seeks to limit tax deferrals on staking and mining to a maximum of 5 years. 

For Smith, the proposed amendment misses the mark. 

Overall, the industry scored on stablecoin with the GENIUS Act passage. But the broader crypto market structure and tax clarity remain uncertain. 

Final Summary

• A new set of law enforcement and Catholic Church groups raised concerns about the CLARITY Act’s ‘broad DeFi exemptions.’
• Crypto tax clarity push could hit a hiccup after a recent amendment to cap staking and mining tax deferral to 5 years.