Four major U.S. law enforcement organizations have jointly warned that Section 604 of the CLARITY Act could create oversight gaps and undermine investigations into illicit digital asset activity. In a letter sent on June 23, 2026, to Acting Attorney General Todd Blanche and White House crypto adviser Patrick J. Witt, the groups argued that broad exemptions in the provision—also known as the Blockchain Regulatory Certainty Act—might shield certain crypto entities from critical know-your-customer (KYC), anti-money laundering (AML), and Bank Secrecy Act obligations.
The signatories—the National District Attorneys Association, National Association of Assistant United States Attorneys, International Association of Chiefs of Police, and National Sheriffs’ Association—represent over 70,000 law enforcement professionals. They stressed that digital assets frequently appear in cases involving narcotics trafficking, fraud, child exploitation, ransomware, sanctions evasion, and terrorism financing. Their letter emphasized that the concern is not with software developers but with exemptions that could allow mixers, tumblers, and certain DeFi businesses to avoid registration and reporting requirements, thus weakening longstanding investigative tools.
The pushback follows weeks of meetings between law enforcement, the administration, Congress, and the crypto industry. While the National Fraternal Order of Police and National Association of Police Organizations did not sign the letter, the groups remain open to working on the bill’s language. The criticism also aligns with a separate warning from nearly 100 Catholic leaders who fear the act could weaken safeguards against human trafficking. Despite the objections, Witt has maintained that the overall CLARITY Act is a "pro-regulatory, pro-enforcement" bill, arguing that the U.S. must set standards as money moves faster globally.
