Summary
- Catholic authorities have urged the Senate to reject a segment of the Clarity Act, citing potential facilitation of human trafficking and other illegal financial activities.
- They argue that protections for decentralized software developers may inadvertently protect tools used for money laundering.
- The Clarity Act faces a variety of opposition as its supporters aim for passage in the near future.
The Clarity Act, which the crypto sector has long sought, is now facing a diverse range of opposition, including figures from Wall Street, consumer advocacy groups, law enforcement, and Native American tribes. Recently, a new and unexpected group has joined the fray: Catholic leaders.
In a letter dispatched on Tuesday to Senate leaders across both political parties, a coalition of Catholic organizations expressed concern that the proposed legislation—which would legalize a wide array of cryptocurrency operations in the U.S.—could conflict with Christian principles by potentially funding human trafficking.
“Catholic social teaching urges us to promote solidarity, protect the vulnerable, and ensure that economic systems are structured to promote justice rather than exploitation,” stated the letter signed by 82 Catholic leaders. “The true measure of any financial system is not merely its capacity to generate wealth or spur innovation, but its ability to protect human life and dignity,” they added.
This coalition was organized by the Alliance to End Human Trafficking, a faith-based national network. The letter was initially reported by Punchbowl News.
They specifically criticized a part of the Clarity Act known as the Blockchain Regulatory Certainty Act (BRCA), which would shield developers of decentralized crypto software from criminal liability. Many in the crypto industry have indicated that the BRCA is a dealbreaker and that they would withdraw their support for the legislation if it were removed.
Over the past year, the Trump administration's Department of Justice has imprisoned several crypto developers for creating software that allows users to conduct private on-chain transactions. These tools have been linked to criminal activities and money laundering. Advocates for decentralization argue that such tools are vital for providing digital currency the same level of privacy as traditional bank accounts or cash transactions.
In their letter, Catholic leaders contended that the BRCA “could hinder responsible oversight of illegal financial activities associated with trafficking, organized crime, child exploitation, sanctions evasion, and other abuses.”
Law enforcement groups have also expressed similar objections to the BRCA. However, this is not the only hurdle the Clarity Act faces in its journey towards approval. The bill is encountering significant pushback from Wall Street, which seeks to include restrictions on stablecoin rewards; from Native American tribes, who want to limit prediction markets’ ability to offer sports betting; and from certain Democrats, who argue that the bill must impose restrictions on the profitable crypto activities of former President Donald Trump and his family.
Industry insiders have noted that if the bill is not passed by next month, its chances of becoming law this year will diminish, especially with the November midterms approaching.