Lummis Fires Back at Warren, Says CLARITY Act Has 16+ Illicit Finance Safeguards
Senator Cynthia Lummis (R-WY) has pushed back against criticism from Senator Elizabeth Warren (D-MA), asserting that the Digital Asset Market Clarity (CLARITY) Act includes more than 16 provisions designed to combat illicit finance, including money laundering, sanctions evasion, and terrorist financing. The exchange follows Warren’s response to a report alleging that a cryptocurrency exchange facilitated illicit Iranian funds, which she argued the CLARITY Act would exacerbate.
Lummis specifically cited Sections 201, 303, and 305 of the CLARITY Act as concrete mechanisms targeting money laundering, foreign sanctions evasion, and illicit financial networks. Section 201 would apply Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) requirements to digital asset brokers, dealers, and exchanges, treating them as financial institutions. Covered firms would need compliance programs, risk assessments, compliance officers, employee training, independent audits, and Suspicious Activity Reports.
Sections 303 and 305 would enhance enforcement: Section 303 establishes new sanctions authorities targeting Iran and other high-risk foreign actors, while Section 305 allows crypto exchanges and stablecoin issuers to temporarily freeze suspected illicit funds while law enforcement obtains legal orders, shielding firms from civil liability when they act in good faith.
Warren countered on X, stating: ‘More evidence that our adversaries exploit crypto to move billions. The Clarity Act, as it’s currently written, would make this problem worse.’ Critics argue the framework fails to adequately cover decentralized finance (DeFi) protocols and digital asset mixers, creating dangerous blind spots.
Over 70,000 U.S. law enforcement professionals have urged federal officials to revise provisions of the CLARITY Act, warning of potential gaps. The debate reflects broader congressional disagreements on balancing digital asset regulation with anti-money laundering and sanctions enforcement.