82 Catholic Leaders, 4 Cop Groups Tell Senate: DeFi's Holy Grail Looks a Lot Like a Trafficking Highway 🚦

A coalition of 82 Catholic leaders and four major U.S. law enforcement organizations sent separate letters to Washington on Tuesday urging lawmakers to revise the CLARITY Act, the market structure bill that would legalize most crypto activity in the United States. Both groups targeted the bill's Section 604, which codifies the Blockchain Regulatory Certainty Act (BRCA) and exempts non-custodial software developers, node operators and unhosted wallet providers from classification as money transmitters under the Bank Secrecy Act.

The religious letter, organized by the Alliance to End Human Trafficking and addressed to Senate Majority Leader John Thune and Minority Leader Chuck Schumer, warned that the carve-out could weaken safeguards against illicit finance. "Catholic social teaching calls us to uphold solidarity, protect the vulnerable, and ensure that economic systems are ordered toward justice rather than exploitation," the signatories wrote. "The test of any financial system is not simply whether it generates wealth or innovation, but whether it safeguards human life and dignity." The letter argued that BRCA "may make it more difficult to responsibly monitor illicit financial activity tied to trafficking, organized crime, child exploitation, sanctions evasion, and other forms of abuse."

A separate June 23 letter from the National District Attorneys Association (NDAA), the National Association of Assistant United States Attorneys (NAAUSA), the International Association of Chiefs of Police (IACP) and the National Sheriffs' Association — representing more than 70,000 law enforcement professionals — was sent to Acting Attorney General Todd Blanche and White House digital assets adviser Patrick Witt. "Regulatory certainty should not come at the expense of accountability, transparency, victim protection, or public safety," the groups wrote, adding that broad exemptions could "shield individuals or entities whose activities facilitate the movement of digital assets, create obstacles to legitimate oversight, or weaken longstanding investigative and enforcement authorities relied upon by law enforcement."

Lindsay Fraser, chief policy officer at the Blockchain Association, rejected the characterization, saying the letter showed a "fundamental misunderstanding" of the CLARITY Act. "Section 604 does one narrow thing," she said. "It prevents non-custodial software developers from being misclassified as money transmitters when they do not custody assets or control transactions." Fraser added that the provision "does not immunize criminals" and "does not limit sanctions enforcement," echoing industry warnings that removal of BRCA would sink industry support for the bill.

The CLARITY Act cleared the Senate Banking Committee 15–9 on May 14, 2026, and is set for a House hearing on July 17, but its path has grown more crowded with opponents. Wall Street banks are pressing for restrictions on stablecoin rewards, Native American tribes are seeking curbs on sports-based prediction markets, and some Democrats are demanding provisions addressing the crypto ventures of President Donald Trump and his family. Industry leaders have said the bill must pass before next month's recess or it is unlikely to become law this year ahead of the November midterms, and prediction market pricing for Trump signing the bill into law in 2026 has slipped to roughly 41–42%.