Clarity Act Section 604 Sparks Developer Liability Fight

Rebecca Rettig, a crypto legal expert who appeared on the same panel, rejected the claim that Section 604 creates a new loophole. She said the provision codifies longstanding Bank Secrecy Act guidance and FinCEN interpretations that distinguish software developers from money transmitters when they do not take custody of assets.

Rettig noted that existing federal statutes, including 18 U.S.C. § 1956, still apply to developers who knowingly assist money laundering or other crimes. The bill does not eliminate criminal liability for intentional misconduct, she said.

Boller Gosewisch acknowledged she is not an attorney but argued that statutory wording could create reasonable doubt in future prosecutions. She urged Congress to think about how sophisticated criminal organizations might use the language in court.

Both sides agreed that combating human trafficking should remain a priority. Boller Gosewisch called for restoring a federal human trafficking coordinator and increasing financial crime investigations targeting trafficking networks. Rettig pointed out that blockchain's public ledger can help law enforcement trace illicit transactions.

The debate reflects a broader tension in crypto regulation: how to write rules that cover decentralized technology without imposing liability on developers who merely write code. The Clarity Act's path through Congress remains uncertain. The Alliance letter was sent to Thune and Schumer. No markup date has been set.

For context on the bill's timeline, see CLARITY Act Senate Window Narrows as Midterms Approach.