U.S. law enforcement organizations have raised concerns about the Clarity Act, warning that parts of the crypto bill may weaken criminal investigations. The groups sent a joint letter to the Department of Justice and the White House this week. Their concern focuses on Section 604, which offers legal protection for some non-custodial blockchain activity. The groups said the provision could limit oversight of people or entities that help move digital assets.
Clarity Act Seeks Clear Crypto Rules As Enforcement Groups Raise Concerns
The Clarity Act is a U.S. crypto market structure bill aimed at creating clearer rules for digital assets. Supporters say the bill would define how federal agencies oversee crypto markets and related services. It also includes language meant to protect software developers who do not hold customer funds.
However, law enforcement groups say some parts of the bill may go too far. Their letter said Section 604 could create broad exemptions from money transmission rules. They warned that this language may make it harder to track crypto flows linked to crime.
Section 604 is also known as the Blockchain Regulatory Certainty Act. It was first introduced as a separate proposal before being added to the wider Clarity Act. The section says non-custodial developers should not be treated as money transmitters.
Law enforcement groups said they do not object to code writing or responsible technology development. Their concern centers on activity that may help transfer digital assets without proper oversight. They said some actors could use the exemption to avoid accountability during crypto crime probes.
Clarity Act News | Source: X
The letter was signed by four major U.S. law enforcement organizations. They include the National District Attorneys Association and the National Association of Assistant United States Attorneys. The International Association of Chiefs of Police and the National Sheriffs' Association also joined the letter.
Clarity Act News: Groups Warn Of AML Gaps
The organizations also pointed to wider concerns beyond Section 604. They said several parts of the Clarity Act could reduce transparency across the anti-money laundering system. In their view, the bill may create gaps in how agencies follow suspicious digital asset activity.
Crypto crime cases often depend on transaction records, service provider data, and clear legal duties. Law enforcement agencies use these tools to trace stolen funds, fraud proceeds, sanctions evasion, and other illegal activity. The groups warned that unclear exemptions could slow investigations and prosecutions.
Their concerns also follow criticism from Catholic leaders across the United States. Nearly 100 leaders from different congregations warned that the bill may weaken safeguards against human trafficking. They argued that crypto oversight rules should not reduce protections used to detect abuse and money movement.
Following the latest Clarity Act concerns, the bill’s approval odds on Polymarket fell from earlier levels above 75% to 42%. The chart shows market confidence weakening through June as traders reassessed the bill’s chances in 2026.
Clarity Act News | Source: Polymarket
White House Adviser Defends Bill
The criticism comes as Washington continues to debate how crypto should be regulated. Patrick Witt, the White House's top cryptocurrency adviser, has defended the Clarity Act. He described the bill as supportive of regulation and enforcement.
Witt said the United States needs to set standards as money moves faster across global markets. He warned that without U.S. rules, other countries could shape the framework used by the industry. His comments show that supporters view the bill as a way to bring more order to crypto markets.
The debate now centers on how lawmakers balance developer protection with law enforcement access. Non-custodial tools remain a key issue because they may operate without holding user funds. Law enforcement groups want clearer limits, so exemptions do not protect actors involved in moving illicit crypto.
The Clarity Act continues to face review as agencies, lawmakers, industry groups, and public interest organizations weigh in. The latest letter adds pressure on officials to examine Section 604 before the bill advances.
