The U.S. Department of Justice has rejected warnings from four major law enforcement organizations, arguing that the CLARITY Act would not weaken criminal investigations and that claims about enforcement loopholes are factually incorrect.
Summary
- The DOJ rejected claims that the CLARITY Act would create enforcement loopholes, calling the criticism factually inaccurate.
- Four law enforcement organizations warned that Section 604 could reduce oversight and create opportunities for criminal misuse of digital assets.
- Senator Cynthia Lummis said the updated CLARITY Act text will be released on July 4 ahead of a planned Senate vote later in July.
According to the Blockchain Association, a DOJ spokesperson responded on June 24 to concerns raised by the National District Attorneys Association, National Association of Assistant U.S. Attorneys, International Association of Chiefs of Police, and National Sheriffs’ Association. The spokesperson said a recent letter from those groups “contains factual inaccuracies and mischaracterizes Administration policy.”
The dispute comes as lawmakers move closer to finalizing the CLARITY Act, a digital asset market structure bill that Senate negotiators are preparing to release for a final review period before seeking floor consideration later in July.
DOJ says criminal investigations remain unaffected
In a June 23 letter, the four law enforcement organizations urged the White House to reconsider parts of the legislation, including Section 604. The groups argued that certain exemptions could create regulatory blind spots that sophisticated criminal actors might exploit.
According to the letter, broad carve-outs could reduce oversight and accountability for some participants in the digital asset industry. The organizations also warned that the provision could interfere with enforcement structures currently used by investigators and prosecutors.
While raising those concerns, the groups stated that they were not opposed to software development or technological innovation. Instead, they said their objections centered on protections that could shield entities functioning as intermediaries from regulatory scrutiny. The letter also questioned provisions tied to the Blockchain Regulatory Certainty Act.
Pushing back against those arguments, the DOJ spokesperson said the legislation would not limit federal prosecutors or investigators. The spokesperson stated that law enforcement access to relevant information would remain unchanged under the proposal.
The DOJ further said the bill would not restrict its ability to investigate or prosecute criminal conduct involving digital assets, including drug trafficking, human smuggling, and terrorism financing.
Senate review advances as CBDC debate continues
As criticism from law enforcement groups draws attention to the bill, Senate negotiations have entered what lawmakers describe as the final drafting stage.
Senator Cynthia Lummis said negotiators plan to publish updated CLARITY Act text on July 4 after months of discussions involving lawmakers, industry participants, and banking representatives. According to Lummis, the release will allow one final round of feedback before Senate leaders pursue floor action later in July.
Lummis said negotiations have been underway since last Labor Day and have required thousands of hours of work on both the CLARITY Act and the GENIUS Act. She added that lawmakers have spent considerable time addressing concerns raised during the drafting process, including objections from parts of the banking sector.
At the same time, debate over federal digital asset policy continues elsewhere in Washington. President Donald Trump recently postponed signing the 21st Century ROAD to Housing Act, despite the measure passing Congress with 358 votes in the House and 85 votes in the Senate.
Although primarily focused on housing policy, the bill contains language that would prohibit the Federal Reserve from creating or issuing a central bank digital currency through 2030.
Trump said he would instead wait for Congress to advance the SAVE AMERICA Act, while Treasury Secretary Scott Bessent has separately stated that a U.S. CBDC is “off the table” under the current administration and has encouraged lawmakers to continue advancing digital asset legislation, including the CLARITY Act.
