FOP Challenges Major CLARITY Act Provision, Warns of Potential Impact on Crypto Enforcement

The National Fraternal Order of Police (FOP), the largest law enforcement organization in the United States, has weighed in on the CLARITY Act, sending a letter to lawmakers that argues against a specific part of the bill. 

In the correspondence, signed by FOP President Patrick Yoes, the group says it strongly opposes Section 604, a provision that, according to the letter’s description, would exempt certain non-controlling developers and providers from being treated as money transmitting companies.

CLARITY Act Section 604 Becomes A Flashpoint

In reports shared on X, Yoes told to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren, arguing that Section 604 would strip prosecutors and law enforcement of statutes they rely on to track and pursue people who commit crimes using digital assets. 

The FOP’s argument is that removing those tools would also make it easier for criminal organizations to profit from illegal activity. At the center of the dispute is how the law would apply to the developers behind crypto-related software. 

The TFTC agency says Section 604 is the part that matters most for open-source contributors, because it would help shield developers from being classified and pursued under money transmission laws based on what users do with the software—rather than on whether the developer ever handled or controlled funds. 

Without that protection, the agency warns, building certain kinds of privacy tools, non-custodial wallets, or software associated with mixing could expose a developer to criminal liability even if they never touched a user’s assets.

The agency’s conclusion frames the conflict as less about whether the FOP supports trading digital assets, and more about where legal responsibility should land. 

It says the FOP does not appear to object to people owning or trading digital assets; instead, it is focused on preserving what it believes are enforcement pathways against the people who build the tools used to move those assets in criminal activity. 

Democrats Don’t Want To Support

While Section 604 remains under scrutiny, the CLARITY Act still faces other unresolved policy battles. As Bitcoinist reported on Monday, the Senate Banking Committee is scheduled to hold its markup of the CLARITY Act on Thursday, but the released draft text is already drawing skepticism.

Among the concerns are objections tied to the bill’s stablecoin-rewards provision. Banking trade groups have reportedly opposed that element, arguing that it could give crypto firms too much flexibility and may encourage deposits to shift away from the insured banking system.

Crypto In America also reports that analysts expect the CLARITY Act to progress along party lines, noting that no Democrats on the Senate Banking Committee are expected to vote in support.