Faith-Based Group Joins Opposition to CLARITY Act DeFi Rule

The CLARITY Act's DeFi provision has a new opponent. The Alliance to End Human Trafficking, a Catholic-backed group, warned Senate leaders that Section 604 could create loopholes for illicit finance. That adds to a growing list of objections ahead of a tight legislative window.

Section 604 codifies the Blockchain Regulatory Certainty Act. It protects crypto software developers from liability for crimes committed by users on decentralized platforms. It also exempts those developers from being treated as money transmitters.

The AEHT letter, seen by Punchbowl, went to Majority Leader John Thune and Minority Leader Charles Schumer. The group said the provision creates “broad carveouts and regulatory ambiguities” that make it harder to monitor trafficking-related financial activity. “At a moment when Congress continues bipartisan efforts to strengthen anti-trafficking protections… policymakers should avoid creating unintended loopholes,” the letter added.

The objection echoes earlier warnings from law enforcement groups. The AEHT joins a list of organizations pressing the Senate, including Senate Democrats who called for CFIUS review of a separate crypto deal.