Administration officials hosted law enforcement representatives at the White House on June 10 to address concerns about Section 604 of the CLARITY Act. The provision would shield many software developers from money-transmitter rules while keeping exchanges and hosted wallets under compliance requirements. Discussions centered on whether broad protections could hinder prosecutions of crypto-related crimes.
The meeting lasted nearly 90 minutes and included around 20 attendees. It focused on language drawn from the Blockchain Regulatory Certainty Act that defines a non-controlling developer or provider as one without unilateral ability to control user transactions.
Law enforcement groups, including the Fraternal Order of Police, warned that the safe-harbor language could limit tools used to trace illicit funds and prosecute offenders. Senator Catherine Cortez Masto has stated that the current draft undermines efforts to recover victims' money.
Industry representatives argue the bill remains pro-enforcement and would improve oversight through better sanctions tools and Treasury coordination. They note that criminal liability for knowing facilitation of illicit activity would still apply under existing statutes.
The bill requires 60 Senate votes to advance, and several Democrats have tied their support to law enforcement satisfaction with the final text. Negotiations continue ahead of the August recess.
