Point of Focus

• The Blockchain Association rejected claims that the CLARITY Act creates blanket exemptions for DeFi.
• The bill would protect non-controlling software developers.
• CLARITY would allocate $3 billion to digital asset enforcement.

The Blockchain Association has urged US senators to advance the Digital Asset Market Clarity Act, rejecting claims that the proposed legislation would weaken anti-money laundering rules or shield decentralized finance from law enforcement.

In an August 3 letter to Senate leaders John Thune and Chuck Schumer, the trade group responded to objections raised by the National Sheriffs’ Association (NSA).

The intervention comes as the Senate approaches its August 7 recess with no floor vote scheduled, leaving the bill’s path forward uncertain.

Blockchain association rejects DeFi exemption claims

The NSA had argued that the CLARITY Act would exempt DeFi protocols, mixers, cross-chain bridges, developers and interfaces from sanctions and anti-money laundering requirements.

However, the Blockchain Association said the bill contains no blanket DeFi exemption. It argued that the legislation instead applies obligations according to the functions businesses perform and the control they exercise over customer funds and transactions.

1/ Today, we sent a letter to @LeaderJohnThune and @SenSchumer responding to the @NationalSheriff’s recent letter on the Clarity Act.

Our response explains why their letter misunderstands the legislation and sets the record straight, point by point.

Below is a walkthrough of… pic.twitter.com/pUiqOVqniS

— Blockchain Association (@BlockchainAssn) August 3, 2026

Under the proposal, firms registered, or required to register, as digital commodity exchanges, brokers or dealers would face Bank Secrecy Act requirements. These include customer identification, suspicious-activity reporting, transaction monitoring and compliance with Office of Foreign Assets Control sanctions.

The bill would also direct regulators to target protocols that present themselves as decentralized while remaining controlled by identifiable people or groups.

Developers would not receive blanket immunity

Section 10604 has become a major source of disagreement. The measure would prevent developers from being classified as money transmitters solely for creating neutral software or self-custody infrastructure when they cannot independently control users’ assets.

The Blockchain Association stressed that this protection would not cover developers who knowingly launder criminal proceeds, violate sanctions, defraud customers or conspire with criminals.

It also rejected the NSA’s proposed standard of regulating “everyone who receives revenue” from digital asset activity.

Such an approach could impose bank-like responsibilities on validators, node operators, cloud providers and other businesses that never control customer assets, the group argued.

Bill promises $3 billion for enforcement

The association also highlighted provisions that would provide $600 million annually between fiscal years 2027 and 2031 for digital asset investigations, prosecutions, training and blockchain analytics, a total of $3 billion.

The legislation would establish a Digital Asset Cyber Innovation Center, create training programs for federal and local investigators and allocate FinCEN another $30 million annually for five years.

The CLARITY act represents a ton of bi-partisan work to finally establish clear rules for crypto in America, which 70% of Americans say we should already have.

Whether people love crypto or hate it, there is broad consensus that we need clear rules to protect consumers, give new…

— Brian Armstrong (@brian_armstrong) August 3, 2026

Several law enforcement organizations support the bill, according to the letter, while another major sheriffs’ group has withdrawn its opposition.

With the Senate set to begin its August recess on Aug. 7, the dispute adds fresh uncertainty to legislation already facing unresolved negotiations and a tight legislative timetable.