US DOJ Slams CLARITY Act Critics, Flags 'Factual Inaccuracies' In Opposition Letter
The U.S. Department of Justice (DOJ) has pushed back on criticism from several law enforcement groups against the CLARITY Act, stating that the claims are factually inaccurate and that the bill will benefit criminal investigations.
On Wednesday, June 24, a DOJ spokesperson responded to four big law enforcement groups that had requested the White House reconsider parts of the CLARITY Act, including Section 604. “The letter from these groups contains factual inaccuracies and mischaracterizes Administration policy,” the DOJ spokesperson said, per The Blockchain Association.
This comes after law enforcement officials sent a letter noting that the CLARITY Act may leave regulatory gaps that criminals could exploit. The letter included signatories from the National District Attorneys Association (NDAA), National Association of Assistant U.S. Attorneys (NAAUSA), International Association of Chiefs of Police (IACP), and National Sheriffs’ Association (NASA).
The organizations argued in a letter dated June 23 that “broad exemptions could create gaps in oversight and accountability that sophisticated criminal actors may exploit.” They also said the CLARITY Act’s Section 604 “risks creating gaps in oversight and accountability” and might undermine current enforcement structures used by investigators and prosecutors.
The groups clarified their concerns were not about opposing innovation but were rooted in public safety. “Our concern is not with individuals who merely write or publish software code, nor with responsible technological innovation,” the letter stated. Rather, they were concerned about protections that might afford entities functioning as intermediaries in the digital asset business regulatory review, and questioned developer protections in the Blockchain Regulatory Certainty Act.
The DOJ disagreed, stating that the CLARITY Act would not impede criminal enforcement. “Law enforcement’s access to relevant information will not change,” the spokesperson said. They further remarked that the CLARITY Act “does not restrict DOJ’s ability to investigate or prosecute criminal activity involving digital assets, including drug trafficking, human smuggling, and terrorism financing.”
The law enforcement group had also argued there was no reason to grant exemptions to any group of market participants, believing everyone should be subject to registration and adhere to know-your-customer rules. They also sought compliance with Bank Secrecy Act requirements or the anti-money laundering provisions under the CLARITY Act, arguing that regulatory clarity must not be achieved at the cost of accountability, transparency, victim protection, or public safety.