US Federal Officers’ Group Backs CLARITY Act

The Federal Law Enforcement Officers Association expressed support for the CLARITY Act but urged changes to the legislation’s language.

Update, July 14, 1:09 pm UTC: This article was updated to include comments from Blockchain Association chief policy officer Lindsay Fraser.

The Digital Asset Market Clarity Act has secured its second public endorsement from a major US law enforcement organization, coming just weeks before what many see as a make-or-break legislative deadline before the Senate’s August recess.

In a July 10 statement , the Federal Law Enforcement Officers Association (FLEOA) said it submitted a letter to the US Senate Banking Committee endorsing the CLARITY Act, while calling for changes to strengthen accountability in decentralized finance (DeFi) and preserve investigators’ existing powers.

Blockchain Association chief policy officer Lindsay Fraser said the endorsement was significant because the FLEOA “represents more than 30,000 federal officers who understand firsthand what investigators need to combat sophisticated financial crime.” She said the letter supported the case that the CLARITY Act would “expand Anti-Money Laundering tools, improve information sharing and preserve longstanding criminal authorities.”

The endorsement came nine days after the bill was backed by the National Organization of Black Law Enforcement Executives (NOBLE), with both letters helping counter arguments that the CLARITY Act would weaken the government’s ability to police crypto crime.

Source: Patrick Witt

In its statement, the FLEOA said the current version of the CLARITY Act “represents meaningful progress toward balancing technological innovation with public safety.”

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“FLEOA commends the Committee for its efforts to establish a clear regulatory framework for digital assets that promotes responsible innovation while preserving critical criminal, anti-money laundering, counterterrorism financing, sanctions enforcement, and investigative authorities.”

However, the FLEOA also urged lawmakers to narrow the CLARITY Act’s DeFi protections; make it clearer who is accountable in decentralized finance (DeFi) systems; stop firms from avoiding regulation by claiming to be decentralized; revise “specific intent” language to make it easier to establish liability and explicitly affirm that the legislation doesn’t limit existing federal investigative authority.

Fraser said the Blockchain Association welcomed “constructive, technically sound refinements” to the legislation, but cautioned that any changes should preserve the distinction between criminal conduct and the development of noncustodial software.

“Protecting developers and preserving law enforcement tools are complementary goals, and FLEOA’s support shows the Senate can get that balance right,” Fraser said.

In June, four law enforcement organizations reached out to the White House with concerns about Section 604 of the legislation, which seeks to protect developers from liability for illicit activity carried out by users on their decentralized platforms.

The organizations, including the National District Attorneys Association, the National Association of Assistant United States Attorneys, the International Association of Chiefs of Police and the National Sheriffs’ Association, argued it could create broad exemptions that would make it tougher for law enforcement to investigate crypto-related crimes.

The opposition prompted the White House to invite law enforcement organizations objecting to the language of the bill to a meeting in late June.

In July, the Major County Sheriffs of America shifted its stance on the CLARITY Act to neutral after initially opposing the bill.

The letter comes less than four weeks before the Aug. 8 Senate recess. Industry insiders have seen the recess as a critical milestone to see it passed this year.

“This is likely our last chance to get real legislation for digital assets on the books before 2030,” Senator Cynthia Lummis said on July 8.

“If we fail to pass the Clarity Act, we are ensuring another country will write the rules for digital assets and we spend the next decade catching up.”

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