Key conclusions
- The 382,000-member Fraternal Order of Police supports the revised CLARITY Act.
- Other law enforcement organizations supported, opposed or moderated their positions.
- Seven Democratic senators said the latest Republican draft is still not true.
The nation’s largest police task force is changing course
The National Fraternal Order of Police (FOP) approved the latest version of the Digital Asset Market Clarity Act after lawmakers revised provisions that raised concerns about cryptocurrency-related prosecution.
Founded in 1915, the FOP describes itself as the largest law enforcement labor organization in the United States, representing more than 382,000 active and retired officers. Its size gives the group a prominent voice in federal debates affecting policing, criminal investigations and officer resources.
In a July 24 letter to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth WarrenFOP national president Patrick Yose said the organization’s concerns had been “satisfactorily addressed.”
Approval reverses the FOP’s earlier position. In its April opposition letter, the organization warned that wording involving non-controlling blockchain developers could limit prosecutors dealing with cryptocurrency-related financial crimes.
The revisions clarified that protections for certain non-controlling software developers and decentralized technologies do not limit the investigation, prosecution, or application of established criminal laws.
Change of positions in law enforcement agencies
FOP joins National Organization of Black Law Enforcement Executives (NOBLE), which became the first major police organization to support the legislation. The NOBL said the bill would expand investigative powers while preserving established criminal authorities, noting early law enforcement approval of the proposal.
The chief sheriffs of America’s counties did not support the bill, but after further discussion withdrew their opposition. The group’s move to a neutral position suggests that the revisions have changed some of those concerns.
The opposition has not disappeared. A coalition representing more than 70,000 prosecutors, sheriffs, police chiefs and other professionals previously called for changes to the CLARITY Actarguing that broad exemptions could weaken surveillance and investigative tools.
The revised bill expands enforcement tools
The revised bill would protect digital asset companies and stablecoin issuers from liability if they voluntarily intercept suspicious transactions or act upon the request of law enforcement agencies. Temporary detentions can give investigators time to prevent losses, track down stolen assets, and disrupt illegal transfers.
The legislation also addresses crypto-ATM fraud and applies the Bank Secrecy Act’s obligations to digital commodity exchanges, brokers and dealers. Official Chapter Summary says these businesses will face anti-money laundering, customer identification and due diligence requirements.
Title IX will establish a grant program to strengthen state and local digital asset enforcement capabilities, establish a law enforcement and homeland security training program, establish a digital asset cyber innovation center, and fund research into new technologies used in cryptocurrency crimes. The provisions also include initiatives to protect older Americans from fraud and improve coordination among federal, state, and local agencies.
Democrats reject the latest Senate bill
US Senator Cynthia Lamis (R-WY) published an updated draft of the CLARITY Act July 22 after Senate banking and agriculture lawmakers combined their market structure proposals. The measure deals with securities supervision, commodity regulation, decentralized finance, control of illicit financing and federal ethical requirements for digital assets.
Seven Democratic senators rejected the Republican textarguing that the proposal still falls short of an acceptable bipartisan agreement. Their joint statement against the current bill identified unresolved issues related to elected official ethics, consumer protection, illegal financing, conflicts of interest and market integrity.
Although seven lawmakers have vowed to continue negotiations, Republicans are expected to need Democratic votes to reach the 60-vote threshold normally required to shut down legislation if the legislation comes up against a gun. The timing of the vote will depend on whether the negotiators can resolve the remaining political and regulatory disputes.
