Clarity Act provision draws accountability concerns for U.S. crypto developers

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Clarity Act accountability concerns

Highlights

The Alliance to End Human Trafficking urges lawmakers to revise Section 604 of the Clarity Act, warning its language could allow crypto developers to avoid accountability for platforms used in trafficking-related payments.
Section 604 clarifies that developers who do not control user funds are not money transmitters, aligning with existing Bank Secrecy Act and FinCEN guidance, according to Rebecca Rettig.
Debate persists over whether the Clarity Act's current wording creates future legal risks for crypto developers, as lawmakers and courts evaluate developer liability in decentralized finance.

Section 604 debate and legislative concerns

As reported by CoinDesk, the Alliance to End Human Trafficking is urging lawmakers to revisit Section 604 of the Clarity Act, saying the language could make it harder to hold some crypto platform developers accountable if their technology facilitates trafficking-related payments.

Katie Boller Gosewisch, executive director of the Alliance to End Human Trafficking, says the group's main concern is wording that developers who do not control user funds are not money transmitters. She argues that some third-party developers could use that distinction to avoid liability if their software is later used in criminal payment flows.

The Alliance and Catholic Charities recently sent a letter to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer outlining their objections. Boller Gosewisch says Congress should consider how bad actors might exploit statutory language over time, even if that is not the immediate intent of the bill.

Crypto compliance and enforcement implications

Rebecca Rettig argues Section 604 reflects longstanding U.S. anti-money laundering policy rather than creating a new legal shield. She says the provision clarifies that developers who do not control customer assets are not treated as money transmitters, in line with existing Bank Secrecy Act and FinCEN guidance.

Rettig also says the bill preserves liability for parties that do control user funds and does not remove exposure under other criminal statutes. She points to existing money laundering laws, including 18 U.S.C. Section 1956, as tools prosecutors can use against developers who knowingly facilitate illegal activity.

Both sides agree stronger enforcement against human trafficking remains necessary, but they differ on whether the current language creates future legal risk. The broader debate over developer liability continues as lawmakers weigh the Clarity Act and courts consider cases involving decentralized crypto protocol developers, while supporters of blockchain note that public ledgers can aid law enforcement by making transactions easier to trace.

Our earlier report covered the House Committee on Small Business’s July hearing calendar, including a session focused on digital assets and what crypto means for Main Street firms. The schedule underscored growing congressional attention to how emerging technologies affect business operations, financing, and federal oversight—context that feeds into today’s debate over crypto legislation and accountability.

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