Catholic leaders warn CLARITY Act could aid crypto crime

Catholic leaders and anti-trafficking groups warn that Section 604 of the CLARITY Act could weaken safeguards against illicit finance and hinder investigations into crypto-related crimes.

The CLARITY Act, a significant cryptocurrency regulation bill, is encountering strong resistance from nearly 100 Catholic leaders and the Alliance to End Human Trafficking. Their primary concern is Section 604, which provides legal protections for decentralized software developers and exempts them from being classified as money transmitters. Faith-based organizations argue that this exemption could weaken safeguards against illicit finance. They believe it may complicate efforts to monitor and investigate crimes such as human trafficking and money laundering within crypto markets. In letters to Senate leaders, these groups warn that the bill could introduce regulatory ambiguities and loopholes, potentially enabling bad actors to exploit cryptocurrencies for illegal activities. Their opposition joins that of law enforcement and consumer advocates, who also fear the bill could undermine efforts to combat trafficking and protect vulnerable individuals.