The nation’s largest police union has weighed in on the CLARITY Act, targeting a provision it says could undercut law enforcement’s ability to pursue crypto-enabled crime.
In a letter to Senate Banking Committee Chair Tim Scott and Ranking Member Elizabeth Warren, signed by National Fraternal Order of Police (FOP) President Patrick Yoes, the organization voices strong opposition to Section 604 of the bill. According to the FOP, that provision would exempt certain non-controlling developers and service providers from being treated as money transmitting businesses — a change the group argues would remove legal tools prosecutors and investigators currently use to track and prosecute criminals who exploit digital assets.
Yoes told lawmakers that carving out these enforcement authorities would make it easier for bad actors and criminal organizations to profit from illegal activity conducted with cryptocurrencies. The dispute centers on how the law would apply to developers of crypto-related software: would liability turn on whether a developer handled funds, or on how users employed the software?
Advocates for developers — including the TFTC agency — say Section 604 is crucial for protecting open-source contributors and other non-custodial software creators. They warn that without the exemption, developers who never touched user funds could still face criminal liability for building privacy tools, non-custodial wallets, or code associated with mixers if users abused those tools. That framing shifts the debate from support for digital asset trading to where legal responsibility should fall: on tool-builders or on the people who misuse those tools.
Section 604 is only one flashpoint. The CLARITY Act’s draft text has already sparked skepticism ahead of a scheduled Senate Banking Committee markup on Thursday. Other contentious elements include a stablecoin-rewards provision that banking trade groups say could give crypto firms excessive flexibility and encourage deposits to migrate away from the federally insured banking system.
Observers expect the legislation to move along party lines: Crypto In America reports that no Democrats on the Senate Banking Committee are expected to support the bill in its current form. With enforcement concerns from law enforcement and regulatory and banking worries from industry stakeholders, the path forward for the CLARITY Act remains uncertain.
Image credits: featured image created with OpenArt; chart from TradingView.com.
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