Major County Sheriffs Shift to Neutral on CLARITY Act

In a Friday letter to Senate Banking Committee chair Tim Scott and Sen. Elizabeth Warren, the Major County Sheriffs of America notified Senate leaders it had shifted from opposing to a neutral position on the CLARITY Act after language in Section 604 was revised. The group also asked Congress to add state and local law enforcement to Section 309.

Section 604 incorporates the Blockchain Regulatory Certainty Act, which would shield developers from liability for illicit activity by users on decentralized platforms. The sheriffs previously warned the provision could create a loophole that would hinder criminal investigations and indicated revised language addressed some of those concerns.

Section 309 directs the Treasury Department to study risks tied to decentralized finance and other crypto services. The MCSA requested that the study explicitly include state and local agencies and urged Congress to fund training, technology and other resources so local investigators can trace illicit proceeds, recover assets and protect victims. MCSA President Bob Gualtieri wrote, “State and local law enforcement agencies investigate these crimes every day and must have the tools, partnerships, and resources necessary to identify offenders, trace illicit proceeds, recover assets, and protect victims.”

Supporters of the bill called the MCSA’s change a removal of a formal objection that had complicated consensus-building. Crypto investor Mark Chadwick described the sheriffs’ initial opposition as “one of the biggest roadblocks,” adding, “With that hurdle now out of the way, the path to passage just got a lot clearer. One more major hurdle down.”

The CLARITY Act passed the Senate Banking Committee in May mostly along party lines and has awaited a full Senate vote since then. Banking groups are pressing for limits on yields paid on stablecoins, arguing high yields could resemble unregulated deposit products and prompt outflows from traditional banks. Sponsors are seeking a floor vote in July with the goal of completing the bill before the November midterm elections.

The legislation would set rules for developers of decentralized systems, establish a framework for stablecoin issuance and require Treasury studies of illicit finance risks tied to crypto. Law enforcement groups have sought amendments to preserve investigative authority and direct resources to state and local agencies, while industry groups have pressed for clearer legal protections for developers and firms.