- Four United States law enforcement groups warn that the Clarity Act may weaken oversight.
- Catholic leaders reportedly said Section 604 could aid trafficking-linked crimes.
- Senate talks face pressure as Section 604 becomes a key dispute for crypto.
A new dispute has emerged around the Digital Asset Market Clarity Act as four major law enforcement organizations warned the Trump administration that key parts of the bill could weaken oversight of crypto activity.
In a June 23 letter addressed to Acting Attorney General Todd Blanche and Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, the National Sheriffs’ Association, National Association of Assistant US Attorneys, National District Attorneys Association, and International Association of Chiefs of Police said they still have concerns about Section 604, known as the Blockchain Regulatory Certainty Act.
The groups said they represent more than 70,000 prosecutors, sheriffs, police chiefs, investigators, deputies, and officers across the United States. They argued that the current language could create gaps in accountability and make investigations into illegal activity more difficult.
The organizations also said the bill does not provide the same safeguards used in traditional finance and warned that some crypto participants could avoid certain anti-money laundering and know-your-customer reporting requirements.
The letter followed weeks of talks involving the administration, lawmakers, and the crypto industry. Section 604 has become one of the biggest sticking points before the bill reaches the Senate floor.
Two groups involved in the negotiations, the Grand Lodge Fraternal Order of Police and the National Association of Police Organizations, did not sign the letter.
Catholic Leaders Raise Human Trafficking Concerns
The bill is also facing resistance from religious groups. The Alliance to End Human Trafficking, backed by Catholic organizations, sent a separate letter to Senate leaders after gathering support from around 100 Catholic leaders and groups.
They warned that Section 604 could make it harder to track money connected to human trafficking, organized crime, child exploitation, sanctions evasion, and other illegal activity. Their argument is that innovation should not come at the cost of public accountability.
Among the signatories were leaders from the Sisters of Saint Joseph of Philadelphia, the Sisters of the Blessed Virgin Mary, and the Congregation of Sisters of St. Agnes.
The Alliance believes the safe harbor created for non-custodial software developers could create broad exemptions that weaken oversight.
Crypto Industry Defends Section 604
Crypto companies continue to back the provision. Industry supporters argue that non-custodial developers only create software and should not be treated like banks or money transmitters.
Supporters also say the provision would give developers legal certainty and prevent innovation from moving overseas. Many industry leaders have called Section 604 a red line and have warned that removing it could jeopardize support for the broader legislation.
The Clarity Act aims to settle the long-running fight between the SEC and the CFTC over digital asset oversight. The bill would classify many tokens, including Bitcoin and Ethereum, as commodities and create registration rules for exchanges and brokers.
The House approved the bill in July 2025 with a 294-134 vote. The Senate Banking Committee later cleared it in May 2026 by a 15-9 margin.
Related: Gaming Industry Urges Senate to Ban Sports Prediction Markets in CLARITY Act
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