Key facts
- The Alliance to End Human Trafficking believes Section 604 of the Clarity Act could weaken accountability for crypto platform developers.
- The group's main concern is language stating developers who do not control user funds are not money transmitters.
- This provision could allow some developers to avoid liability if their software facilitates trafficking-related payments.
- A counterargument posits that Section 604 merely clarifies existing anti-money laundering policy and does not eliminate liability for those controlling user funds.
- The debate centers on regulating based on current technology versus anticipating potential future abuses.
The Alliance to End Human Trafficking is urging lawmakers to reconsider Section 604 of the Clarity Act, arguing that its current wording could diminish accountability for cryptocurrency platform developers whose technologies are exploited to facilitate human trafficking.
Katie Boller Gosewisch, executive director of the Alliance, stated that the provision's language, which suggests developers not controlling user funds are not money transmitters, is a primary concern. She believes this could enable third-party developers to evade responsibility if their software is used for trafficking-related transactions.
The Alliance, along with Catholic Charities, has communicated these concerns in a letter to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer. Boller Gosewisch discussed these issues on CoinDesk's The Policy Protocol.
Conversely, Rebecca Rettig argued that Section 604 aligns with existing U.S. anti-money laundering policies, clarifying that developers without control over customer assets are not considered money transmitters, consistent with Bank Secrecy Act and FinCEN guidance. She asserted that the bill maintains liability for parties that do control user funds and does not remove potential charges under other criminal statutes, citing 18 U.S.C. § 1956 as a tool against developers knowingly facilitating criminal activity.
The core of the disagreement lies in whether legislation should address current technological realities or anticipate future misuse. Boller Gosewisch, while not an attorney, suggested that sophisticated criminals might exploit the statutory language to create reasonable doubt in prosecutions, even if unintended by lawmakers. She drew a parallel to hotels having a broader "duty of care" in civil litigation, even without direct participation in criminal acts.
Despite their differing views on the bill's language, both sides agree on the importance of strengthening efforts against human trafficking. Boller Gosewisch suggested restoring a federal human trafficking coordinator and increasing financial crimes prosecutions focused on trafficking as beneficial steps. Rettig highlighted blockchain's transparency as a valuable investigative tool for law enforcement due to traceable public ledgers. The broader debate on developer liability continues as the Clarity Act progresses and legal cases involving decentralized crypto protocols are considered.