US Law Enforcement Association Withdraws Opposition to CLARITY Act: Report

The Major County Sheriffs of America stated that amendments to the CLARITY Act are still being sought to provide local law enforcement agencies with greater resources for investigating illicit finance cases.

The Major County Sheriffs of America has reportedly withdrawn its opposition to the CLARITY Act after concerns were initially expressed over the bill’s potential impact on investigations involving illicit financial activity.

In a letter sent on Friday to US Senate Banking Committee Chair Tim Scott and Senator Elizabeth Warren, the MCSA said its position on the CLARITY Act had been changed to “neutral” after several concerns outlined in its May 14 letter regarding Section 604 of the legislation were addressed.

Section 604 concerns the Blockchain Regulatory Certainty Act, under which protection is intended to be provided to developers from liability arising from illicit activities carried out by users on their decentralized platforms.

The MCSA had previously argued that a loophole could be created by Section 604, making crypto-related criminal investigations more difficult for law enforcement while offering opportunities for exploitation by bad actors.

Although bipartisan backing has been received by the CLARITY Act, its progress through the Senate has largely been slowed by banking groups pushing to limit stablecoin yield, arguing that it operates like an unregulated deposit product capable of triggering trillions of dollars in outflows from the traditional banking system.

A full Senate vote has been awaited by the bill since May, after it was approved by the Senate Banking Committee largely along party lines.

Supportive senators are pushing for a full Senate vote this month, hoping the legislation can be approved and signed into law before the US midterm elections in November.

Major Obstacle to the CLARITY Act Reportedly Removed#

Crypto investor Mark Chadwick described the MCSA’s earlier opposition to the CLARITY Act as one of the “biggest roadblocks” that had prevented the bill from advancing through the Senate.

“With that obstacle now out of the way, the route toward passage has become much clearer,” Chadwick said. “Another major hurdle has now been removed.”

MCSA Continues to Push for Changes to the CLARITY Act#

The MCSA said it wants the CLARITY Act to be amended so that state law enforcement agencies are included in Section 309, which directs the Treasury Department to examine decentralized finance and the risks associated with illicit financial activity.

MCSA President Bob Gualtieri argued that the training, technology and resources required to investigate increasingly sophisticated digital asset-enabled crimes linked to fraud, narcotics trafficking, ransomware, child exploitation, terrorism financing and other illegal activities should be provided by Congress.

“State and local law enforcement agencies investigate these crimes every day and must have the tools, partnerships, and resources necessary to identify offenders, trace illicit proceeds, recover assets, and protect victims.”