White House Pushes Crypto CLARITY Act as Senate Deadline Looms

White House staff will meet Monday with law enforcement groups to broker a compromise on the CLARITY Act’s financial crime rules, according to people familiar with the matter. The session could determine whether the bill reaches the Senate floor before the August recess.

The central friction point is Section 604, a provision in the Blockchain Regulatory Certainty Act. It would exempt software developers from state money-transmitter licensing requirements when they do not control the applications they build. Advocates say the language protects decentralized-finance builders who never hold user assets. Opponents call the exemption too permissive.

The National Sheriffs Association wrote in May that the exemption is “overly expansive.” The group argued that some developers do control financial transactions and should fall under Bank Secrecy Act rules. Other law enforcement representatives back the bill. Patrick Witt, the White House crypto policy advisor, has held multiple meetings with both sides this year. Witt contends the CLARITY Act gives law enforcement better tools to fight illicit activity than the current regulatory vacuum.

Senator Elizabeth Warren, the Banking Committee’s ranking Democrat, has criticized the bill’s anti-crime language. She pointed to cryptocurrency’s use by organized crime and narcotics traffickers as a reason for tighter oversight. Senator Cynthia Lummis, a lead sponsor, acknowledged that negotiations continue on DeFi definitions, illicit-finance provisions, and ethics rules. She said the final text will be posted around July 4 for review.