The Alliance to End Human Trafficking (AEHT) has voiced opposition to the CLARITY Act's DeFi provision, Section 604, citing concerns it could weaken safeguards against illicit finance and create loopholes for criminals involved in trafficking.
The opposition from AEHT highlights a potential conflict between fostering innovation in the digital asset space and maintaining robust safeguards against financial crime, potentially delaying or altering the CLARITY Act's passage.
The CLARITY Act is facing new opposition from the Alliance to End Human Trafficking (AEHT), a faith-based group that has voiced concerns over its decentralized finance (DeFi) provision. In a letter to Senate leaders, AEHT argued that Section 604 of the bill, which codifies the Blockchain Regulatory Certainty Act (BRCA), could create significant loopholes that undermine efforts to combat illicit finance and human trafficking.
The provision in question aims to exempt crypto software developers from liability for user actions on decentralized platforms and prevent them from being treated as money transmitters. AEHT contends that these "broad carveouts and regulatory ambiguities" could make it more difficult to monitor financial activity tied to criminal enterprises.
The group urged the Senate to re-examine the CLARITY Act for adequate anti-money laundering and accountability measures before proceeding. This opposition comes as other groups, such as gaming organizations lobbying against prediction market sports betting, also seek to influence the bill's language.
Meanwhile, the Digital Chamber has been actively lobbying lawmakers in favor of the CLARITY Act, seeking a clear regulatory roadmap for digital assets. The U.S. House of Representatives has scheduled a hearing for July 17, though the Senate has yet to set a floor vote. Market sentiment, as reflected by Polymarket data, suggests only a 42% probability of President Donald Trump signing the bill into law this year.