Key facts
- The National Sheriffs’ Association opposes the CLARITY Act's DeFi developer protections, citing public safety risks.
- The NSA argues the bill could obscure crypto transactions and impede financial crime prevention.
- The CLARITY Act has gained support from other law enforcement groups following revisions.
- Treasury Secretary Scott Bessent urged a swift Senate vote on the bill.
- President Trump is considering a bipartisan ethics proposal that could lead to a Senate vote.
- The proposed ethics provision would allow state attorneys general to sue the DOJ for enforcement failures.
The CLARITY Act, a bill aimed at providing regulatory certainty for decentralized finance (DeFi) developers, is facing renewed opposition from the National Sheriffs’ Association (NSA). The NSA argues that a key provision protecting DeFi developers could inadvertently facilitate illicit activities and make it harder to prevent and prosecute financial crimes.
In a letter to Senate leaders John Thune and Chuck Schumer, the NSA detailed concerns that exempting DeFi developers from traditional finance (TradFi) requirements poses significant law enforcement and public safety risks. While some law enforcement groups have previously voiced similar objections, the latest draft of the CLARITY Act has garnered endorsements from organizations like the Fraternal Order of Police and the Major Cities Chiefs Association, following the inclusion of additional law enforcement provisions.
Earlier this week, Treasury Secretary Scott Bessent pushed back against these concerns, asserting that non-custodial builders and developers have never been subject to registration under the Bank Secrecy Act. He urged the Senate to proceed with a vote on the bill.
Separately, President Donald Trump is reportedly considering a bipartisan ethics proposal put forth by Senators Thom Tillis and Ruben Gallego. This proposal aims to address concerns from Democrats regarding enforcement powers, potentially allowing state attorneys general to sue the Department of Justice if it fails to enforce ethics provisions. Approval of this ethics deal by the White House could clear the path for the Senate to vote on the CLARITY Act before the August recess. Data from the prediction platform Polymarket indicates a slight increase in the perceived likelihood of the bill becoming law this year.