The CLARITY Act has since gained momentum, and the Blockchain Association sent a letter to the National Sheriffs’ Association challenging their claim that legislators created a legal loophole for decentralized finance.
It sent an eight-page letter to Senate Majority Leader John Thune and Minority Leader Chuck Schumer on August 3, refuting claims that the bill would exempt DeFi platforms, software developers, mixers or blockchain bridges from anti-money laundering and sanctions requirements.
Instead, it reasoned that the law draws a distinction between those who exercise actual control over customer assets or transactions and software developers who provide neutral software.
BREAKING: 🇺🇸 US SENATE LEADER JUST CONFIRMED CONGRESS WILL NOT LEAVE FOR AUGUST RECESS UNTIL CLARITY ACT VOTE IS HELD
MAJORITY LEADER JOHN THUNE TELLS PUNCHBOWL: “WE WILL STAY IN SESSION UNTIL WE FINISH IT”
CLARITY ACT IS ABOUT TO TAKE ITS FIRST MASSIVE STEP TOWARD ULTIMATE… pic.twitter.com/PioPVTMrAq
— The <a href="https://cryptoz7.com/quick-spark-bitcoin-etf-folds-crypto-etf-giants-pull-ahead/” title=”QUICK SPARK: Bitcoin ETF Folds, Crypto ETF Giants Pull Ahead”>Bitcoin Historian (@pete_rizzo_) August 3, 2026
With the Senate on deadline to vote on the market structure proposal, and continued work by senators on other legislative agendas, no timeline has been set for a procedural vote on the CLARITY Act. While growing attention from industry and lawmakers has been paid to the bill, its near-term fate remains unclear.
Section 10604 of the act would prevent software developers and people who provide self-custody tools or maintain blockchain infrastructure from being classified as money transmitters in the US.
This exemption would not apply if they had or had exclusive control over their users’ digital assets or had the unilateral ability to transact on behalf of these users. According to the Blockchain Association, this approach is consistent with existing principles and does not create a new exemption.
The organization further argued that the guidance issued by FinCEN and the international standards of the Financial Action Task Force take a functional approach, not a revenue-based one, to compliance obligations.
Registered brokers, dealers and exchanges would still have to have anti-money laundering programs, comply with customer verification requirements, file suspicious activity reports, keep records and comply with the U.S. sanctions regime.
🚨JUST IN: The Blockchain Association has sent a letter to Senate Majority Leader Thune rebutting each point of the National Sheriffs’ Association’s claims about the CLARITY Act.
The group argues the NSA’s July 31 letter mischaracterizes the bill’s treatment of DeFi, crypto… pic.twitter.com/fRzwI8TTUq
— Coin Bureau (@coinbureau) August 4, 2026
Additionally, advocates noted that existing criminal laws prohibiting money laundering, terrorism financing, wire fraud, sanctions evasion, conspiracy and theft would remain applicable, and developers who ease unlawful transactions, control customers’ funds, or are otherwise complicit in criminal activity would continue to be subject to criminal prosecution.
The bill directs the SEC, in consultation with the Treasury Department, to issue rules addressing protocols that present themselves as decentralized but actually serve as financial intermediaries.
The reception of the law enforcement community overall has been mixed. The National Sheriffs’ Association has promoted expanding the scope of the law to more participants. National police and federal law enforcement, among others, support the bill’s control-based regulatory framework.
The proposal also provides substantial funding for digital asset investigations, blockchain analysis, training, and other res not an afterthought
If Senators quickly take it up, any change needs to be sent to the House and the president for approval.
