CLARITY Act Faces New Opposition as Faith-Based Group Objects to DeFi Provision

The CLARITY Act is now facing opposition from the Alliance to End Human Trafficking (AEHT), which has objected to the DeFi provision in the crypto bill. The faith-based group claims that the provision will make it harder to crack down on illicit finance, echoing warnings from law enforcement groups.

AEHT Warns About DeFi Provision In CLARITY Act

In a letter seen by Punchbowl, the Catholic-backed AEHT warned Senate Majority and Minority leaders, John Thune and Charles Schumer, about the DeFi provision in the CLARITY Act. Specifically, they expressed concern that the provision could weaken safeguards against illicit finance and create vulnerabilities that bad actors may exploit.

The DeFi provision in question is Section 604, which codifies the Blockchain Regulatory Certainty Act (BRCA). The BRCA ensures that crypto software developers are not liable for crimes committed by users on decentralized platforms. These developers are also exempt from being treated as money transmitters.

The AEHT expressed concern that Section 604  in the CLARITY Act could create “broad carveouts and regulatory ambiguities” that make it more difficult to monitor illicit financial activity tied to crimes like trafficking.

“At a moment when Congress continues bipartisan efforts to strengthen anti-trafficking protections — including through legislation such as the Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act — policymakers should avoid creating unintended loopholes that could undermine those efforts,” the group said.

In line with this, they urged the Senate to reexamine the lack of illicit finance, anti-money laundering, and accountability in the CLARITY Act before advancing it any further. The AEHT is the latest group to lobby the Senate concerning the crypto bill.

As CoinGape reported, Gaming groups are lobbying the Senate to include language in the crypto bill that prohibits sports betting on prediction markets. These developments come as the Senate faces a narrow window to advance the crypto bill before its August recess.

Crypto Group Pushes For The Bill’s Passage

In an X post, the Digital Chamber revealed that they met with lawmakers to advocate for the CLARITY Act to bring a clear roadmap to digital asset market structure. The group notably met with pro-crypto Senator Cynthia Lummis, who has played an integral part in negotiations to pass the bill.

Meanwhile, as CoinGape reported, the U.S. House has scheduled a hearing on the crypto bill for July 17. However, the Senate has yet to schedule a floor vote for the bill, even as they head for the July 4 recess.

Optimism continues to fade about the Senate passing the CLARITY Act anytime soon, especially given pending issues such as ethics and DeFi. Polymarket data shows only a 42% chance that President Donald Trump will sign the bill into law this year.