The National Sheriffs’ Association has withdrawn its opposition to the CLARITY Act, adopting a neutral position 12 days before the Senate’s scheduled Sep. 15 procedural vote.
Summary
- The National Sheriffs’ Association changed its CLARITY Act position from opposition to neutral.
- Its earlier objections focused on anti-money laundering rules for DeFi platforms and non-custodial software.
- The Senate needs at least 60 votes to advance the bill through the Sept. 15 cloture vote.
- House scheduling changes leave Congress little time to complete the legislation before the midterm elections.
Why the sheriffs withdrew their CLARITY Act opposition
The National Sheriffs’ Association said in a Sep. 3 letter to Senate Majority Leader John Thune and Minority Leader Chuck Schumer that it had changed its position on the Digital Asset Market Clarity Act from opposition to neutral.
NSA President Sheriff Troy Wellman and Executive Director Justin Smith said the bill covers a complex area in which lawmakers, the White House, and interested organizations have spent months considering unresolved details. The group decided that Congress should continue its work rather than face continued opposition from the sheriffs’ organization.
“We believe the most appropriate course is to step back and allow the legislative process to proceed to establish a clear, effective, and much-needed regulatory framework,” Wellman and Smith wrote.
The letter removes a vocal law enforcement objection before senators decide whether to begin formal debate on the legislation. Neutrality does not amount to an endorsement, and the NSA did not say that all its earlier concerns had been resolved.
Instead, the organization recognized the work undertaken since it first challenged the bill and said remaining questions should be handled through negotiations. Its decision gives Senate leaders more room to discuss illicit-finance provisions without an active opposition campaign from one of the country’s main sheriffs’ groups.
Law enforcement organizations had not taken a single position on the proposal. In July, the National Organization of Black Law Enforcement Executives endorsed the legislation, while the NSA and the International Association of Chiefs of Police raised concerns about its treatment of decentralized services and software developers. The dispute created a law enforcement split over whether the proposal would preserve investigators’ existing powers.
Section 604 drove the anti-money laundering dispute
In a May letter to the Senate Banking Committee, the NSA warned that Section 604 could provide what it called a “blanket exemption” from anti-money laundering requirements for mixers, tumblers and decentralized finance platforms.
The group argued that criminals could use developing software, algorithms, and agentic artificial intelligence to transfer crypto without traceable records or responsible intermediaries. According to its May assessment, such tools could assist money laundering, terrorism financing, and sanctions evasion.
“Some will use evolving software, algorithms, and agentic AI to help transfer digital assets without tracing or accountability, launder money, finance terrorism, and evade sanctions,” the organization wrote at the time.
Section 604 addresses when developers and providers of non-custodial crypto software may be treated as money transmitters. Under the proposed protection, a developer who creates software without taking control of customer assets would not automatically face the licensing and Bank Secrecy Act duties imposed on a business that transmits funds for users.
Supporters have argued that publishing code is different from operating a financial service or controlling customer money. Law enforcement critics, however, have said the distinction could reduce the number of companies required to verify customers, file suspicious activity reports, and retain records that investigators can obtain through subpoenas.
After the NSA’s May warning, the White House invited concerned law enforcement organizations to discuss the proposal’s treatment of illicit finance. The meeting focused on objections involving DeFi, anti-money laundering enforcement, and the legal protections available to developers who do not hold user funds.
The Blockchain Association later disputed the NSA’s interpretation. In July, CEO Summer Mersinger called the measure an important consumer-protection effort, while the industry group maintained that businesses controlling customer funds would remain subject to financial-crime laws.
Senate Republicans also released a 616-page merged draft on July 22. As crypto.news previously reported, the text combined provisions developed by the Senate Banking and Agriculture committees and added a law enforcement title alongside 25 sections dealing with sanctions and anti-money laundering gaps.
The CLARITY Act would divide SEC and CFTC oversight
H.R. 3633 would set federal rules for deciding whether a digital asset falls under the Securities and Exchange Commission or the Commodity Futures Trading Commission. The proposal would leave securities and investment contracts under SEC oversight while giving the CFTC authority over qualifying digital commodities and parts of the spot market.
For U.S. investors, the regulator assigned to an asset could determine the disclosure, trading, and customer-protection rules that apply to it. The legislation would also establish registration requirements for crypto businesses and create a process for qualifying networks to show that an asset should receive commodity treatment rather than remain governed as a security.
The House passed its version of the CLARITY Act by 294-134 in July 2025. In May 2026, the Senate Banking Committee advanced an amended proposal by a 15-9 vote, with two Democrats joining all 13 Republicans on the committee.
Committee approval did not settle the bill’s path through the full Senate. Republicans hold 53 seats, while the chamber requires 60 votes to invoke cloture and overcome a filibuster. At least seven Democrats would therefore need to support the procedural motion if every Republican voted for it.
Several Democratic senators said in July that they wanted stronger language covering illicit finance, consumer protection, market integrity, and conflicts of interest. Their objections included the bill’s ethics rules for elected officials who hold crypto assets or maintain financial ties to digital-asset businesses.
Sen. Elizabeth Warren also criticized the July draft, saying its ethics provisions would still permit President Donald Trump to hold and trade crypto while taking official action on digital-asset policy. Warren’s statement said the text would not prevent Trump-affiliated entities or family members from launching crypto products that use his name or image.
Senate vote faces a shortened congressional calendar
Senate leaders delayed the vote in August after lawmakers failed to reach an agreement before leaving Washington for recess. Thune later filed a cloture motion on the motion to proceed, setting up a Sept. 15 vote that could open formal consideration of the legislation.
Clearing cloture would not pass the CLARITY Act. Senators could still debate the proposal, offer amendments, and hold more procedural votes before deciding whether to approve the full bill.
SEC Chair Paul Atkins said on Sept. 2 that he expected movement within two weeks as the Senate prepared for the procedural test. Atkins has also said the SEC can pursue crypto exemptions and other rule changes under its existing legal powers if Congress does not enact the bill.
Separate SEC work includes a proposed framework that would address token offerings, disclosure requirements, and the conditions under which some crypto assets may leave securities status. Agency rules can be revised by later SEC leadership, while an act of Congress would establish requirements in federal law.
Even if senators approve an amended version, the House would need to accept the changes or negotiate a common text with the Senate before the proposal could reach the president. House Republican leaders have canceled voting sessions during the weeks of Sept. 21 and Sept. 28, leaving Sept. 17 as the chamber’s final scheduled voting day before lawmakers depart for the November midterm election campaign.
