- MCSA turned neutral on the CLARITY Act after Section 604 developer safeguards were clarified.
- Section 604 protects non-controlling developers but preserves liability for illicit transfers.
- Sheriffs still want federal study roles, blockchain tools, training, and forensic support.
The Major County Sheriffs of America has withdrawn its opposition to the CLARITY Act after receiving clarification about Section 604. The shift removes a law-enforcement obstacle as senators seek a floor vote before the November midterm elections.
In a July 3 letter, the organization said that discussions with the administration had clarified the Blockchain Regulatory Certainty Act. However, the U.S. Sheriffs’ group adopted a neutral position rather than endorsing the bill.
Section 604 Clarifies Developer Protections and Liability
Generally, Section 604 protects non-controlling blockchain developers from money-transmitter regulation when they cannot independently control users’ assets. Consequently, software and self-custody providers would avoid licensing solely for supporting blockchain activity.
At the same time, the provision preserves criminal liability for anyone transferring funds known to originate from crime. It also permits enforcement against conduct beyond those protected activities.
That clarification addresses concerns raised in a May 13 letter signed by four law-enforcement organizations. The groups warned Section 604 could weaken oversight, obstruct tracing, and help criminals conceal illicit proceeds.
Their concerns included narcotics trafficking, fraud, ransomware, child exploitation, and terrorism financing. Nevertheless, only MCSA has changed its position, while the other three groups have announced no reversal.
Sheriffs Seek Federal Resources and Investigative Roles
Although the opposition has ended, MCSA still wants local agencies represented in the Treasury study under Section 309. The study will examine mixers, illicit-use estimates, privacy benefits, and possible legislative responses.
Moreover, the U.S. Sheriffs’ group requested seats on advisory panels and interagency working groups. It also called for blockchain analytics, forensic tools, training, and investigative resources.
MCSA President Bob Gualtieri said agencies need stronger capabilities to identify offenders, trace proceeds, recover assets, and protect victims. Meanwhile, Mark Chadwick called the earlier opposition a major barrier to Senate passage.
Still, the CLARITY Act faces banking resistance over stablecoin yield. Banks argue such products resemble unregulated deposits and could redirect trillions of dollars from traditional institutions.
The Senate Banking Committee advanced the bill in May, mostly along party lines. Supporters now want a full Senate vote this month and enactment before November.
Related: NOBLE Becomes First Major Law Enforcement to Endorse the CLARITY Act
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