The Blockchain Association has pushed back against criticism of the latest CLARITY Act draft, sending an eight-page response to Senate leaders John Thune and Chuck Schumer on August 3.
The crypto industry group argued that the bill does not give decentralized finance platforms, software developers, mixers, or blockchain bridges a free pass from anti-money laundering and sanctions rules.
According to the association, the legislation creates a difference between companies that control customer assets or transactions and developers who simply create software without having control over users’ funds.
The response came after the National Sheriffs’ Association raised concerns about the bill on July 31, arguing that developer protections in Section 10604 could make financial crime investigations more difficult. The group called for the section to be removed or significantly narrowed.
Blockchain Association disagreed, saying that simply earning revenue does not automatically make someone a financial institution under the Bank Secrecy Act. The group said regulators focus on whether a company actually performs financial activities or controls transactions.
The association said crypto brokers, dealers, and exchanges covered by the bill would still be required to follow anti-money laundering programs, customer verification rules, suspicious activity reporting, recordkeeping requirements, and sanctions compliance.
The group also defended Section 10604, which protects developers who do not control users’ transactions. It said the protection applies only when developers lack the legal authority and ability to move or control customer assets.
Blockchain Association explained that criminal laws related to money laundering, fraud, sanctions violations, terrorism financing, conspiracy, theft, and aiding criminal activity would remain unchanged. Developers who knowingly participate in illegal activity or control criminal funds could still face prosecution.
The draft legislation also directs the SEC and Treasury Department to create rules for platforms that claim to be decentralized but still perform intermediary functions. The association said this would prevent companies from avoiding regulation simply by labeling themselves as DeFi projects.
The debate has created divisions among law enforcement groups. Blockchain Association pointed to support from organizations including the Fraternal Order of Police, Major Cities Chiefs Association, National Organization of Black Law Enforcement Executives, and Federal Law Enforcement Officers Association.
Other groups remain concerned that broad developer protections could make it harder to identify people responsible for illegal activity involving decentralized systems.
The CLARITY Act draft also includes funding for digital asset investigations. The bill proposes $600 million annually from fiscal year 2027 through 2031 for state and local investigations, training, blockchain analysis tools, and a Digital Asset Cyber Innovation Center. It would also provide FinCEN with an additional $30 million per year for five years.
Meanwhile, the Senate has not yet scheduled a vote on the CLARITY Act. Lawmakers focused Monday’s session on a continuing resolution instead, leaving the crypto market structure bill without a confirmed floor date.
A possible procedural move could still happen later this week, but no official schedule or agreement has been announced. Even if the Senate advances the bill, lawmakers would still need to debate the legislation, consider amendments, and approve a final version before it could move forward.
