Law Enforcement Appreciation Week and the CLARITY Act

This week, Americans are recognizing the bravery of law enforcement personnel who rush into danger to ensure our safety. Law Enforcement Appreciation Week serves as a moment to consider what we owe to the officers, agents, and prosecutors dedicated to this critical work. Right now, the most impactful way Congress could honor them isn’t through a ceremony or a resolution, but by addressing a significant shortcoming in the CLARITY Act before it becomes law. Specifically, crypto platforms and their intermediaries must be held to the same Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) standards as other financial institutions.

To be candid, I support the intentions of the Act and have advocated for broader cryptocurrency adoption for over fifteen years. While this legislation mandates certain compliance measures with the Bank Secrecy Act for crypto platforms—something that is certainly a step forward—it still misses crucial protections and may inadvertently create a false sense of security that criminals could take advantage of.

During my tenure as Utah’s Attorney General, I consistently defended the crypto industry against regulatory overreach. For instance, I led an 18-state coalition opposing the SEC’s improper attempts to regulate digital assets through outdated legal theories without Congressional approval. I also played a role in successfully assisting U.S. crypto executive, Tigran Gambaryan, who was wrongfully imprisoned in an African nation.

I personally hold digital assets, having invested in crypto and advised companies working with stablecoins and other forms of digital currency. I genuinely believe cryptocurrency can provide real financial freedom for many Americans, and I think it’s imperative to develop a sound regulatory framework rather than rushing through legislation.

This is why I feel compelled to speak out about the flaws in the current version of the CLARITY Act.

With more than a decade of experience tackling some of the toughest cases, from human trafficking to the rise of fentanyl and cybercrime, I’ve seen the darkest aspects of society. It’s clear to me that the deficiencies in our existing crypto anti-money laundering framework are a boon to every criminal enterprise that my team and other law enforcement agencies have pursued.

The cartels we monitored weren’t interested in the theories behind blockchain; they focused on swiftly moving money across borders without a trace. The current structure of crypto, especially through loosely regulated platforms, provides them with opportunities to exploit this oversight. The fraud and scams we’ve tackled are now operating at an unimaginable scale. Across the nation, sheriffs are witnessing seniors being directed to cryptocurrency ATMs by scammers pretending to be law enforcement. Various schemes, including romance fraud and “pig butchering,” have devastated ordinary families. Additionally, ransomware gangs using crypto have led to hospital closures. These are the ongoing challenges my former colleagues now face, often with inadequate resources.

The reason for this inadequacy is straightforward. Traditional banks are mandated by the Bank Secrecy Act to know their customers, watch transactions, and report anything suspicious. This legal framework allows law enforcement to track illicit money and hold wrongdoers accountable. Many digital asset platforms, however, operate without these same compliance requirements. Criminals are well aware of this and take full advantage.

I do support the CLARITY Act’s aim to create a structured market for digital assets. Yet, as it currently stands, the legislation contains dangerous gaps. Any platform facilitating money transfers should adhere to the same BSA and AML regulations as a community bank. If they don’t, provisions must be established for effective law enforcement. Authorities ought to be able to trace funds, access account information, and, under probable cause, seize assets connected to illegal activities. Without these essential tools, law enforcement faces immense challenges.

Thoughtful federal legislation must incorporate provisions that facilitate effective enforcement. Congress should refrain from sending a bill to the president that complicates law enforcement’s responsibilities.

This Law Enforcement Appreciation Week, I urge Congress to honor those who confront these challenges daily by getting this issue right. With a well-balanced approach, cryptocurrency and the CLARITY Act can drive financial freedom and innovation. However, that potential is jeopardized when the industry operates in a regulatory environment that ultimately protects both criminals and legitimate users.