CLARITY Act Update Today: Crypto Bill Gains Momentum After MCSA Policy Shift

The Major County Sheriffs of America (MCSA) has shifted its position on the Digital Asset Market CLARITY Act (H.R. 3633), moving from opposition to neutrality following recent discussions over Section 604, also known as the Blockchain Regulatory Certainty Act.

In a July 3 letter addressed to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren, MCSA said that continued discussions with the administration and state and local law enforcement had provided “additional clarity” on the interpretation and expected implementation of Section 604.

The organization added that there remains an opportunity to strengthen the legislation. At the same time, it believes this can be done while supporting responsible innovation and law enforcement’s operational needs.

MCSA Changes Position on the CLARITY Act

MCSA said it has continued reviewing the legislation since its May 14 letter. Now the group believes the bill can be improved without undermining innovation.

“Based on that continued review, MCSA is now neutral on H.R. 3633,” the organization wrote.

However, the group did not fully endorse the legislation. Instead, it urged Congress and the administration to pursue targeted amendments that would better support agencies investigating the criminal use of digital assets.

Section 604 Remains the Key Issue

Section 604 has emerged as a central point of debate. This is because it addresses the regulatory treatment of non-custodial software developers and distributed ledger service providers.

Law enforcement groups, including the Fraternal Order of Police and the National Sheriffs’ Association, have previously argued the provision could make it harder to prosecute financial crimes involving cryptocurrency. Moreover, they say it might exempt certain mixers, tumblers, and decentralized finance activities from money transmission rules.

Supporters argue that the provision preserves criminal liability for individuals who knowingly facilitate illicit transactions. Meanwhile, it protects developers who do not control customer funds.

Sheriffs Push for Greater Role in Crypto Enforcement

MCSA is asking Congress to amend the bill by giving state and local law enforcement agencies a formal role in the Treasury Department study required under Section 309. In addition, it seeks participation in future advisory bodies and interagency working groups.

The organization said local agencies investigate many digital asset-related crimes and should help shape future regulatory and policy recommendations. It also called for increased funding for training, blockchain forensic tools, technology, and investigative resources.

MCSA warned that digital assets are increasingly being used in fraud, ransomware, narcotics trafficking, child exploitation, organized retail theft, and terrorism financing. 

Investor Mark Chadwick said that, because the group’s opposition had been viewed as a key obstacle in the Senate, its shift to a neutral position could ease law enforcement concerns. Furthermore, this change could strengthen the bill’s momentum and improve its chances of passage.