During my decades of service, my top priority was always keeping our citizens and our communities safe. In law enforcement, we know that preventing crime requires clear rules, strict accountability, and being equipped with the proper tools to investigate and monitor criminal activity. Whether tracking down local fraud rings or dismantling sophisticated networks that target our seniors, the key is to stay one step ahead.
That is why I have serious concerns that the United States Senate could pass a bill that would give the upper hand to the bad guys while creating a massive vulnerability in our country’s financial defenses.
The CLARITY Act is intended to regulate the entire cryptocurrency market, but as currently written, it contains loopholes that benefit criminal networks and bad actors. As a retired sheriff and former president of the Virginia Sheriffs’ Association, I urge Sens. Mark Warner and Tim Kaine to continue to stand with the law enforcement community as they have so many times before and oppose this dangerous legislation.
There are many flaws with the CLARITY Act, but one of the most alarming issues is that it does not hold the cryptocurrency industry to the same Bank Secrecy Act and Anti-Money Laundering standards our traditional banking sector has been subject to for decades. This represents a massive special interest carve-out. These baseline regulatory requirements are not just bureaucratic red tape, they are vital tools that law enforcement relies on to investigate and trace illicit funds, stop tax evasion, and dismantle international criminal enterprises. Why would we allow the crypto industry to operate in such an under-regulated way when we know that in 2024 alone, consumers reported losing $9.3 billion in crypto-related financial crime?
How, then, does this bill actually propose to hold the cryptocurrency industry accountable? Not with strict, mandated regulation, but with studies, pilot programs, and voluntary coordination. Studies aren’t going to cut it when it comes to intercepting illicit wire transfers or freezing a cartel’s assets. Very specifically, gaps in Section 604 of the bill explicitly exempt decentralized finance (DeFi) platforms from money-transmitting regulations and future registration requirements. If the goal is to create a “wild, wild west” environment for international sanctions evasion, cyber-ransomware, drug trafficking, and the funding of rogue states, then this is the bill for you.
Let’s be clear – when distinguished organizations and frontline public safety groups, including the International Association of Chiefs of Police and the National District Attorneys Association are uniformly and strongly opposed to the CLARITY Act, we must heed the warnings. Most notably, my former colleagues at the National Sheriffs’ Association issued a statement saying that giving DeFi platforms a blanket exemption under the fiction that they “simply write code” is incredibly bad policy. The association rightly notes that many financial crime operations intentionally avoid traditional custody while still facilitating, routing, and laundering money for criminal networks.
Virginia has been so fortunate to have senators like Mark Warner and Tim Kaine who have a well-earned reputation for being pragmatic leaders who put the security of our Commonwealth and our country first. As the full Senate prepares to consider the CLARITY Act, I respectfully urge Sens. Warner and Kaine to vote no until the same strict BSA-AML regulations that apply to our traditional banking industry are mandated and strongly enforced across all digital asset platforms without exception.
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