A group of four U.S. law enforcement organizations is warning the Trump administration that parts of the Clarity Act could make it harder to police crypto crime. In a letter reported this week, they say they remain concerned about Section 604, which incorporates the Blockchain Regulatory Certainty Act (BRCA). They argue that this section “could create gaps in oversight and accountability” and hinder efforts to investigate and prosecute illicit activity involving digital assets.
According to the letter, the groups stress that they do not oppose software development itself but are concerned about broad carveouts that shield some actors from key rules.
Section 604 is designed to protect non‑custodial developers, open‑source contributors, and other infrastructure providers from automatically being treated as money transmitters if they do not control user funds. However, the organizations say that exemptions tied to BRCA could allow people who “facilitate the movement of digital assets” to avoid routine scrutiny.
Concerns over KYC/AML and “Gaps” in Rules
Law enforcement coalitions say that the Clarity Act still falls short of safeguards used in traditional finance. They warn that some digital asset participants could become exempt from standard know‑your‑customer and anti‑money‑laundering reporting if the current text remains, which they argue would weaken “longstanding investigative and enforcement authorities relied upon by law enforcement.”
They add that such gaps could make it harder to trace money tied to human trafficking, organized crime, child exploitation, sanctions evasion, and terrorist financing. A separate letter from the Alliance to End Human Trafficking urges Senate leaders to revisit Section 604 and confirm it includes “sufficient accountability measures” before advancing the bill, increasing pressure on lawmakers as they weigh protections for open‑source developers and DeFi infrastructure.
The worries follow weeks of talks involving law enforcement groups, the administration, politicians, and officials from the crypto industry. Discussions have focused on the BRCA language, which is currently a huge barrier to getting the Clarity Act to the Senate floor. Supporters worry a too-narrow BRCA may stifle open-source activity; skeptics claim the existing language limits enforcement mechanisms.
Two of the most influential police organizations did not sign the latest letter. The Grand Lodge Fraternal Order of Police and the National Association of Police Organizations, both active in earlier Clarity Act talks, stayed off the document. Their absence underscores divisions within law enforcement over how to balance strict crypto rules with room for innovation.
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