CLARITY Act: US Law Enforcement and Catholic Leaders Sound the Alarm on Crypto Risks

An unlikely coalition is forming in the United States against the CLARITY Act, the proposed legislation designed to clarify the regulation of cryptocurrencies. Law enforcement associations and leaders of the American Catholic Church are speaking out, arguing that the bill opens the door to serious abuses.

The criticism is direct: in its attempt to provide regulatory certainty to the crypto sector, Congress risks sacrificing victim protection and public safety on the altar of financial competitiveness.

Such a broad and unlikely front — spanning sheriffs, prosecutors, and bishops — illustrates just how far the concerns about this bill extend beyond the usual circles of the crypto debate.

What Is the CLARITY Act and Why Is It So Divisive?

The CLARITY Act (Crypto and AI Regulatory Landscape for Innovation and Technology Act) is a US legislative proposal aimed at establishing a unified regulatory framework for digital assets. Its stated goal is to settle the long-running jurisdictional dispute between the SEC and the CFTC over the oversight of cryptocurrencies, by clearly defining which tokens qualify as securities and which qualify as commodities.

On paper, the initiative seems reasonable. The crypto industry has been calling for legal clarity for years in order to attract institutional investors and avoid arbitrary enforcement actions. However, several provisions of the bill are raising serious concerns among law enforcement authorities.

According to the law enforcement associations that signed the opposition letter, the CLARITY Act would weaken existing tools used to combat money laundering, terrorist financing, and online fraud. “Regulatory certainty must not come at the expense of accountability, transparency, victim protection, or public safety,” they stated in a joint release.

Why the Catholic Church Is Weighing In on the US Crypto Debate

The presence of Catholic leaders in this coalition may come as a surprise, but it stems from a very concrete social concern. Organizations linked to the American Catholic Church have documented cases of parishioners falling victim to sophisticated crypto scams — most notably pig butchering scams, a form of romance fraud that ends with victims losing their life savings through fake investment platforms.

These groups argue that the CLARITY Act, by loosening compliance obligations for certain players in the sector, would reduce the ability of authorities to trace illicit funds and prosecute those responsible. For them, this is not a technical issue — it is a matter of social justice and the protection of vulnerable communities.

This unusual alliance between law enforcement and religious institutions sends a powerful political signal to Congress, as the bill still has several legislative hurdles to clear. It also highlights a growing paradox: the more crypto seeks to legitimize itself through regulation, the more it draws the attention — and the criticism — of stakeholders who previously had no reason to engage with it.

A Warning Signal for Crypto Regulation in the United States

The opposition to the CLARITY Act comes against a backdrop of intense legislative activity in the US. Following the FIT21 Act passed by the House of Representatives in 2024, Congress has been making repeated attempts to build a legal framework for digital assets. But each new proposal exposes deep tensions between innovation and oversight.

Critics of the CLARITY Act are pointing to potential gaps in KYC (Know Your Customer) and AML (Anti-Money Laundering) obligations for certain categories of decentralized protocols. If these exemptions are retained, they could create regulatory blind spots that bad actors would be able to exploit.

For the crypto industry, the challenge is now clear: it must convince not only financial regulators, but a far broader range of social stakeholders, that regulation can go hand in hand with protection — and not just with competitiveness.