Oregon Democratic Senator Ron Wyden this week wrote to Senate Majority Leader John Thune, requesting that Section 604 (the Blockchain Regulatory Certainty Act, BRCA) be retained in future drafts of the CLARITY Act. BRCA provides a safe harbor for developers who do not hold or control customer funds. However, a joint letter signed by law enforcement alliances representing over 70,000 prosecutors, sheriffs, and police officers opposes this.
Core Content of Section 604 of BRCA: Developer Safe Harbor and Legal Definition of Non-Fund Transfer Entities
According to reports, the legislative intent of Section 604 of BRCA is to establish a safe harbor for blockchain software developers who do not hold or control customer funds, explicitly stating that such developers should not be considered money transfer businesses, thereby providing legal clarity for ordinary programmers and preventing them from being classified as financial intermediaries subject to regulation.
Wyden stated that this exception aims to focus law enforcement resources on "those operating unlicensed remittance businesses," rather than neutral software developers. Wyoming Republican Senator Cynthia Lummis earlier introduced this bill this year, with Wyden as the sole co-sponsor. This bipartisan support is seen as a key political signal for BRCA.
Wyden also emphasized that the clause includes a "common-sense exception": any non-custodial developer found transferring or using funds derived from illegal activities will still not be protected by the safe harbor.
Law Enforcement and Catholic Alliance Opposition Statements: 70,000 Law Enforcement Signatures and Human Trafficking Concerns
Reports indicate that opposition to Section 604 of BRCA was issued in two waves: the first signed by organizations representing over 70,000 law enforcement officers, sent to Acting Deputy Attorney General Todd Blanche and White House cryptocurrency advisor Patrick Weidner. Participating organizations include:
- National District Attorneys Association (NDAA)
- American Prosecutors Association (NAAUSA)
- International Association of Chiefs of Police (IACP)
- National Sheriffs' Association
The law enforcement alliance stated that broad exemption clauses could protect those aiding illegal fund transfers, arguing that "regulatory certainty should not come at the expense of accountability, transparency, victim protection, or public safety." They also pointed out that other parts of the CLARITY Act could weaken transparency and anti-money laundering safeguards.
The Catholic anti-human trafficking network "End Human Trafficking Alliance" sent a letter to Thune and Schumer, directly linking Section 604 to human trafficking and money laundering risks, calling for amendments to this clause before advancing the bill.
Frequently Asked Questions
Why has Section 604 of BRCA become the biggest controversy in the CLARITY Act legislation?
According to reports, Section 604 of BRCA establishes a safe harbor for developers who do not hold customer funds. Opponents (law enforcement and Catholic groups) believe that broad exemptions could make it harder to track illegal fund flows; supporters (cryptocurrency industry and Wyden) argue that this clause provides legal clarity for ordinary developers. Judge Torres noted that this issue remains divided across federal courts, and the final fate of this clause is a key variable in whether the CLARITY Act can pass before the August recess.
Why does Wyden support BRCA, and what is his core argument?
According to Wyden’s letter to Thune and Schumer, his core argument is that BRCA will coordinate policies between DOJ and FinCEN, focusing law enforcement resources on unlicensed remittance businesses rather than neutral developers; and that the clause includes a "common-sense exception" ensuring developers transferring illegal funds can still be held accountable. Wyden stated, "Wise policy empowers law enforcement while also fostering innovation."
How urgent is the legislative schedule for the CLARITY Act?
Reports indicate that Congress will enter a one-month recess in August, with the November elections approaching. Besides the BRCA controversy, lawmakers are also deadlocked over whether to establish new ethical standards for officials related to cryptocurrency (including Trump). Senate Republican leaders expect the bill to pass the Senate in July, but the legislative window is narrowing; the specific process will follow the official announcements from the U.S. Senate.
