What to know:
- CLARITY Act gains support from FLEOA ahead of a key Senate vote.
- FLEOA proposes changes to strengthen DeFi accountability and preserve federal investigative powers.
- Law enforcement backing grows, with FLEOA becoming the second national agency to endorse the bill.
CLARITY Act now has yet another major endorsement from an important U.S. law enforcement agency as the market-structure bill inches closer to a crucial August deadline.
The FLEOA released a statement on July 10 indicating its submission of a letter to the US Senate Banking Committee advocating for the passing of the CLARITY Act. The organization was calling upon the legislators to amend the bill in order to enhance accountability in DeFi systems without undermining the powers of law enforcement agencies.
The CEO of the Crypto Council, Ji Kim, said he was pleased with the support, stating that it confirms the inclusion of good consumer protections in the bill.
FLEOA Calls for Stronger CLARITY Act Rules
Although advocating for the overall passage of the bill, FLEOA put forth certain suggestions to improve upon it. As per FLEOA, the CLARITY Act represents progress toward the regulation of digital assets in an effective manner while ensuring that innovation does not compromise security and public welfare.
But FLEOA asked for changes in some sections of the bill dealing with decentralized finance. FLEOA wants Congress to specify liability in such systems so that companies do not use it as an excuse to avoid regulations by calling themselves decentralized.
This recommendation also included altering the “specific intent” wording of the legislation to help establish legal liability and including additional language clarifying that the legislation does not limit current federal investigatory powers.
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CLARITY Act Support Continues to Grow
The recent statement comes after several weeks of negotiations between lawmakers and law enforcement agencies regarding how the bill would affect DeFi.
Four prominent agencies, namely the National District Attorneys Association, National Association of Assistant United States Attorneys, International Association of Chiefs of Police, and National Sheriffs’ Association, expressed concern regarding Section 604 of the CLARITY Act back in June.
These groups felt that the bill would give the developers of the software broad immunity from any wrongdoing done by the users of the software, which may hinder any investigations into cryptocurrency matters.
This prompted the White House to hold talks with law enforcement officials that same month.
In more recent times, the Major County Sheriffs of America has shifted its stand from being against the bill to being neutral regarding the bill, whereas the National Organization of Black Law Enforcement Executives (NOBLE) has come out in support of the bill. FLEOA’s endorsement is now the second major endorsement from a national law enforcement group for the bill.
Senate Faces Important August Timeline
This latest backing comes just a few weeks shy of the start of the US Senate’s August break on Aug. 8, a critical date according to many in the digital asset space as far as pushing through the legislation is concerned.
Cynthia Lummis, a Senator, warned that failure to approve the CLARITY Act would see the US lagging as other nations set up global standards for digital assets.
With greater support from elements within the law enforcement community and ongoing discussions about potential modifications to the DeFi rules, Congressmen find themselves under mounting pressure to move forward with the CLARITY Act before the recess for August begins in the Senate.
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