CLARITY Act Inches Closer To Senate Floor Vote As Sheriffs' Group Drops Section 604 Opposition

The Blockchain Regulatory Certainty Act would clarify that developers and infrastructure providers who cannot control user funds are not money transmitters under federal law.

• The Major County Sheriffs of America dropped its opposition to the CLARITY Act, shifting to a neutral stance after discussions with the administration over Section 604.
• The group did not endorse the bill, but urged lawmakers to give state and local law enforcement a formal role in Treasury-led studies and advisory bodies created under the legislation.
• The move removes a key obstacle for Senate supporters, as some Democrats had linked their votes to law enforcement's position on the bill's developer-protection provisions.

The Major County Sheriffs of America (MCSA) reportedly shifted to a neutral position on the Digital Asset Market Clarity Act (CLARITY ACT), dropping its earlier opposition to the crypto market-structure bill on Friday.

In a letter to the Senate Banking Committee, Chairman Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA), the sheriffs' group said continued discussions with the administration over Section 604 had provided additional clarity on how the provision would be interpreted and implemented, according to Terrett.

Source: @EleanorTerrett/x

MCSA stopped short of endorsing the bill. The group said there remained an opportunity to strengthen the legislation and urged Congress to amend H.R. 3633 to give state and local law enforcement a formal role in the Treasury study required under Section 309 and in any advisory bodies established under the Act, per the letter. The letter was signed by MCSA President Sheriff Bob Gualtieri and copied to Patrick Witt, executive director of the President's Council of Advisors for Digital Assets.

Why It Matters 

The shift removed a source of law-enforcement resistance that had been flagged as a hurdle for the bill's progress. Democrats, including Mark Warner and Catherine Cortez Masto, had tied their support to law enforcement's sign-off on Section 604, and the bill needed 60 votes to clear the Senate floor.

However, opposition did not disappear. The National Sheriffs' Association, the Fraternal Order of Police, the National District Attorneys Association, and other law enforcement and prosecutor groups continued to raise concerns about Section 604 late last month.

What Section 604 Does

Section 604, also known as the Blockchain Regulatory Certainty Act (BRCA), would establish that a developer or infrastructure provider who cannot move or control a user's digital assets is not a money transmitter under federal law. 

Law enforcement groups had earlier warned the provision could create gaps in oversight and make it harder to prosecute financial crimes involving cryptocurrency. Ark Invest's Cathie Wood, by contrast, backed the provision as "thoughtful and nuanced" amid the pushback.

The House passed H.R. 3633 by a 294-134 vote last July. The Senate Banking Committee advanced it with a 15-9 bipartisan vote in May this year, placing it on the Senate calendar ahead of a possible floor vote.

What Is The CLARITY Act?

Specifically, the CLARITY Act aims to formally establish the Securities and Exchange Commission and Commodity Futures Trading Commission's jurisdiction over digital assets. By categorizing payment stablecoins as non-securities, the legislation is expected to streamline listing and custody requirements for issuers such as Circle Internet Group (CRCL).

Circle’s stock closed over 4% on Friday. On Stocktwits, retail sentiment around CRCL remained in the ‘extremely bullish’ zone, while chatter stayed at ‘extremely high’ levels over the past day. 

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