CLARITY Act gets new enforcement component targeting crypto crime

US Senate Republicans have published an updated version of the CLARITY Act, and one new component immediately stands out: a completely separate section focused on strengthening law enforcement’s ability to tackle crypto-related crime. Journalist Eleanor Terrett shares the details, while the ethics paragraph remains the biggest political sticking point for now.

More funding, more training and a cyber centre

The new enforcement section of the law allocates additional resources on several fronts. More funding will go to crypto investigations at state and local level, and budgets will be freed up for blockchain analysis tools. In addition, new training programmes will be introduced for law enforcement officers and prosecutors, so that they are better equipped to prosecute digital crime.

A striking element is the creation of a so-called cyber centre, specifically focused on threats from state-sponsored actors such as North Korea and Iran. Additionally, the bill provides for a public-private partnership to coordinate efforts against crypto fraud. We previously wrote about how an agreement on the ethics paragraph opens the way for the CLARITY Act in the Senate.

Stablecoin providers face new obligations

In addition to the enforcement measures, the updated text also contains new rules for stablecoin providers. They must now comply with legal orders to freeze, seize, destroy or reissue tokens when applicable. This is a significant expansion of the authorities’ powers over this market.

The rest of the previously established provisions remain in place. Think of the rules around stablecoin rewards and self-custody of crypto. The biggest obstacle in the negotiations remains the ethics paragraph. It would prohibit the president, vice president, members of Congress, federal judges and other officials from issuing or sponsoring digital assets for paid purposes during their term of office. On top of that, they would have to sell their crypto holdings or place them in a blind trust. The Department of Justice would gain civil enforcement powers for violations, but this point faces resistance from the Democrats.