CLARITY Act Faces New Opposition as Faith-Based Group Objects to DeFi Provision
The CLARITY Act is facing new opposition from the Alliance to End Human Trafficking (AEHT), a Catholic-backed faith-based group, over its DeFi provision. In a letter to Senate leaders John Thune and Charles Schumer, the AEHT expressed concern that Section 604 of the bill could create regulatory loopholes making it harder to monitor illicit financial activities tied to crimes like trafficking.
Section 604 codifies the Blockchain Regulatory Certainty Act (BRCA), which ensures software developers are not liable for crimes committed by users on decentralized platforms and exempts them from being treated as money transmitters. The AEHT warned this could create “broad carveouts and regulatory ambiguities” that weaken safeguards against illicit finance.
“At a moment when Congress continues bipartisan efforts to strengthen anti-trafficking protections… policymakers should avoid creating unintended loopholes,” the group stated, urging the Senate to reexamine the bill before advancing it further.
The AEHT joins gaming groups lobbying against provisions that allow sports betting on prediction markets. The Senate faces a narrow window before its August recess, with only a 42% chance that President Donald Trump will sign the bill into law this year, per Polymarket data.
Proponents like the Digital Chamber are pushing for passage, meeting with pro-crypto Senator Cynthia Lummis to advocate for a clear digital asset market structure. The U.S. House has scheduled a July 17 hearing, but a Senate floor vote has yet to be scheduled.