Nearly 100 Catholic leaders oppose Clarity Act crypto safe harbor

Nearly 100 Catholic clergy and lay leaders sent a letter on Tuesday to Senate Majority Leader John Thune and Senate Democratic Leader Chuck Schumer opposing Section 604 of the Clarity Act. The letter was delivered by the Alliance to End Human Trafficking, a coalition supported by Catholic organizations.

The group objects to Section 604, also known as the Blockchain Regulatory Certainty Act (BRCA), which creates a legal safe harbor clarifying that noncustodial software developers are not money transmitters. The letter argues the provision could create carveouts and regulatory ambiguity that make it harder to investigate and prosecute crypto-related crimes tied to human trafficking, organized crime, child exploitation, sanctions evasion and other abuses.

Signatories include leaders from the Sisters of Saint Joseph of Philadelphia, the Sisters of the Blessed Virgin Mary and the Congregation of Sisters of St. Agnes, among nearly 100 clergy and lay leaders across the United States.

In the letter the coalition wrote: “The Catholic Church has long taught that economic systems and markets must ultimately serve the human person, especially the poor, vulnerable, and those at greatest risk of exploitation.” The group urged senators to preserve tools that help monitor illicit financial activity while allowing responsible financial innovation.

Supporters of Section 604 in the crypto industry say the BRCA provides legal certainty for developers building noncustodial tools and prevents regulatory treatment that could push developers offshore. Opponents say a broad exemption could reduce accountability for technologies that facilitate illicit transfers.

Cody Carbone, chief executive of the Digital Chamber, posted on X: “Section 604 says NON-CUSTODIAL developers are not money transmitters,” and emphasized a distinction between builders of software tools and entities that hold or transmit customer funds.

Section 604 began as a standalone bill intended to distinguish developers of decentralized software from entities that hold or transmit customer funds. Lawmakers later incorporated the provision into the larger Clarity Act, and it has become a point of contention as Congress drafts market-structure rules for the crypto industry. Lawmakers must decide whether to keep, modify or remove the provision as they consider the bill.