Industry Group and Law Enforcement Clash Over DeFi Carve-Outs The Blockchain Association has come out in defense of the Digital Asset Market Clarity Act, pushing back on criticism from the Na
The Blockchain Association has come out in defense of the Digital Asset Market Clarity Act, pushing back on criticism from the National Sheriffs' Association (NSA) over the bill's treatment of decentralized finance. The trade group called the NSA's reading of the bill's DeFi provisions incorrect, arguing the legislation would help, not hinder, law enforcement efforts against crypto crime.
The NSA, which represents over 3,000 sheriffs and 10,000 public safety officials nationwide, had warned lawmakers against giving any crypto entity a blanket exemption from anti-money laundering and know-your-customer rules. In a letter to Senate Banking Committee leaders, the sheriffs' group wrote: "No good reason supports giving mixers, tumblers, and DeFi a blanket exemption."
At the center of the dispute is Section 604 of the bill, which incorporates the Blockchain Regulatory Certainty Act. That provision would prevent software developers who do not exercise ultimate control over their tools from being classified as money transmitters under Bank Secrecy Act rules, a protection the crypto industry treats as foundational for continued DeFi development in the United States.
The Blockchain Association has also sent a letter, co-signed with 160 former national security and law enforcement officials, to Senate majority and minority leaders expressing strong support for the Clarity Act. The group maintains that clearer federal rules would make it easier, not harder, to track illicit finance and bring more digital asset activity under U.S. oversight.
The law enforcement debate is unfolding against an increasingly tight legislative calendar. The Senate has until its scheduled August 7 recess to reach an agreement and advance the legislation during the current window. With that deadline fast approaching, the U.S. Senate has effectively shelved the Digital Asset Market Clarity Act as it rushes to pass other legislation ahead of the summer break.
It is doubtful that the Clarity Act will become law in 2026 given the upcoming midterm elections, which are likely to disrupt Congress this fall.Without a bipartisan compromise, the bill may struggle to secure the 60 Senate votes needed to overcome a filibuster.Congressional prediction markets currently estimate only a 30 to 38 percent chance of the Act passing before year-end.
The bill has had a long road to this point. The House passed the CLARITY Act on July 17, 2025, with a bipartisan vote of 294 to 134.The Senate Banking Committee then advanced the bill with a 15 to 9 vote on May 14, 2026. A full Senate floor vote remains the final hurdle before any presidential signature, and the path to clearing it is narrowing by the day.
Sources:CoinDesk: White House to Speak With Law Enforcement Groups to Push CLARITY ActYahoo Finance: CLARITY Act Faces Senate Clock as Law Enforcement Pushes Back on DeFi ExemptionCrypto Briefing: Senate Has 5 Days to Pass the Crypto Clarity Act Before Summer Recess
