The most significant crypto legislation globally is advancing in the U.S. Senate. However, as it stands, the bill could leave the country vulnerable to money laundering, sanctions evasion, and high-level conflicts of interest, according to Greytak.
By Scott Greytak|Edited by Betsy Farber Jun 9, 2026, 3:30 p.m. 4 min readMake preferred on U.S. Capitol in Washington (Jesse Hamilton/CoinDesk)The Digital Asset Market Clarity Act, which passed the Senate Banking Committee on May 14, aims to establish regulations for an industry that has evolved more rapidly than the legal frameworks designed to govern it.
There is widespread consensus that crypto regulation is overdue. Yet, as the bill approaches a vote in the Senate, it reveals five critical gaps that could compromise the stability and effectiveness it intends to create.
The DeFi Gap
A platform or intermediary that facilitates the transfer of value cannot evade regulatory oversight by labeling itself as “decentralized.” North Korean hackers have repeatedly taken advantage of mixers and other virtual asset laundering mechanisms to move stolen cryptocurrency and fund the regime's weapon initiatives. The Treasury has identified that Tornado Cash was utilized to launder over $455 million taken by the Lazarus Group, with U.N. experts noting that North Korea laundered an additional $147.5 million through the same service. These are precisely the vulnerabilities Congress needs to address: any digital asset platform or intermediary conducting financial operations should adhere to relevant anti-money laundering and sanctions regulations.
The Tornado Cash Loophole Gap
Some crypto tools are built to operate automatically, even when they are recognized as being used for money laundering. When anti-money laundering regulations apply to individuals but disappear when software performs similar tasks, it creates a loophole rather than a safeguard. The urgency is real; in May, FinCEN alerted U.S. banks that Iran's Islamic Revolutionary Guard Corps had established a multi-jurisdictional shadow banking system combining digital asset frameworks with front companies to launder oil revenues and fund weapons procurement. Congress should empower the Treasury Department's Office of Foreign Assets Control (OFAC) to take decisive action against anonymizing tools that facilitate sanction evasion.
The Stablecoin Gap
The GENIUS Act, enacted earlier this year, laid out a foundational structure for stablecoin issuers but allowed illicit actors to bypass that framework through DeFi protocols or unregulated platforms that handle stablecoins without adequate oversight. Sanctioned Russian entities have already exploited stablecoins via platforms that impose no identity verification, enabling them to move funds and maintain financial networks. The Clarity Act should mandate stablecoin issuers to implement comprehensive monitoring systems to detect and report suspicious activities. Without enhanced oversight, stablecoins may become the preferred method for sanctions evasion, fraud, ransomware, trafficking, and corruption-related money laundering.
The Jurisdictional Gap
A platform serving American users or operating within the U.S. financial system should not be able to avoid its anti-money laundering and sanctions responsibilities by merely registering abroad. Recently, the Justice Department charged a Venezuelan national for allegedly laundering around $1 billion through a network utilizing various accounts and transactions involving cryptocurrency exchanges and shell companies. Such cross-border activities are precisely what can slip through the cracks when platforms choose jurisdictions with minimal scrutiny. If a platform facilitates illegal financial activities, it should be barred from accessing the legitimate financial system.
The Ethics and Conflict of Interest Gap
Just days before the 2025 inauguration, a member of President Trump's family reportedly entered into an agreement to sell a 49% stake in their crypto venture, World Liberty Financial, to an Abu Dhabi-backed firm for $500 million. According to The Wall Street Journal, the Trump Administration subsequently approved a deal allowing the UAE to access advanced AI chips, overcoming significant national security concerns. The Clarity Act is advancing under an administration where family members have direct financial interests in the digital asset ventures the legislation aims to regulate. A neutral crypto regulatory framework cannot be constructed on such a foundation. The Clarity Act must prohibit public officials and their immediate family from owning, promoting, sponsoring, or soliciting investments in digital asset ventures while serving in office.
These five gaps are not merely theoretical; each relates to ongoing activities, including sanctioned states moving funds, foreign officials laundering bribes, hostile entities financing weapons, and a sitting president's family selling stakes in the industry the legislation intends to regulate. Congress has a chance to create rules that uphold the integrity of the U.S. financial system while also having the potential to accommodate those who seek to exploit it. The current version of the Clarity Act does not sufficiently differentiate between these two outcomes.
The Senate's decision is not about whether to regulate crypto; it is about ensuring that the rules established will be robust enough to protect consumers, safeguard U.S. national security, and prevent public office from being leveraged for personal or familial gain. Five critical gaps exist in this bill that must be addressed.
RegulationClarity ActNote: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
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