A leading US police association has swung behind the latest draft of the CLARITY Act, but deep divisions over political ethics, DeFi oversight and stablecoin rewards still threaten to derail the crypto bill before the Senate’s August recess, with betting markets putting its chances of being signed at just 30%.
The Major Cities Chiefs Association (MCCA) – which represents senior law-enforcement leaders from some of the largest metropolitan forces in the United States – has formally endorsed the updated text in a letter to Senate Banking Committee chair Tim Scott and ranking member Elizabeth Warren.
MCCA said recent changes had resolved several concerns previously raised by police and prosecutors, highlighting strengthened law-enforcement provisions and an expanded role for state and local agencies in Sections 10203, 10204 and 10309 of the bill.
Its backing removes one of the most prominent institutional opponents to the proposed US crypto market structure framework, but does not address the most contentious political sticking points that are holding up a bipartisan agreement in the Senate.
Police resistance softens after key revisions
MCCA’s move follows a steady shift among major law-enforcement bodies towards at least conditional support for the CLARITY Act.
The National Organization of Black Law Enforcement Executives was the first major police association to endorse the legislation. The Federal Law Enforcement Officers Association later offered backing on the condition that lawmakers tightened provisions on accountability in decentralised finance (DeFi).
The National Fraternal Order of Police, which represents more than 382,000 officers, also reversed its earlier opposition after examining revisions to the Blockchain Regulatory Certainty Act language embedded in the bill.
Major County Sheriffs of America has stopped short of an outright endorsement but has withdrawn its formal objection, opting for a neutral stance while urging Congress to guarantee state and local participation in Treasury studies and advisory panels created under the legislation.
Earlier pushback from law-enforcement groups had centred on how the CLARITY Act treated non-custodial crypto developers.
Non-custodial developers and DeFi in focus
The Blockchain Regulatory Certainty Act section is designed to ensure that developers and infrastructure providers who do not control customer funds are not automatically categorised as money transmitters. Supporters say those protections are vital so that programmers are not criminally liable simply because criminals make use of open-source software.
Police organisations and prosecutors argued that earlier drafts were too permissive. They warned that DeFi operators, mixers and similar services could invoke the exemption to avoid registration and scrutiny, complicating efforts to trace illicit flows and recover assets for victims.
In response, lawmakers revised the text to clarify that developers can still be prosecuted if they knowingly or intentionally facilitate money laundering or other criminal activity. The updated draft also reaffirms existing criminal-enforcement powers and strengthens the role of state and local agencies.
However, Democrats led by Senator Catherine Cortez Masto, along with several prosecutors, are still pressing for further tightening. Their alternative proposal would scale back or remove some of the protections that they fear could shield certain crypto service providers from prosecution.
Banks demand tighter rules on stablecoin rewards
While many in the banking sector back the broader aim of establishing a federal framework for digital assets, they are urging changes to the bill’s treatment of stablecoins.
A coalition of 134 banking association leaders and senior bank executives has called on the Senate to reinforce Section 10404, which bars stablecoin issuers from paying interest but permits some rewards linked to payments, memberships and other activities.
Banks argue that exchanges could use those exceptions to offer returns that, in practice, resemble interest on stablecoin holdings. They warn that such products might divert deposits away from regulated banks and reduce lending capacity for mortgages, agricultural credit and small-business finance.
The American Bankers Association and five other financial trade groups have broadly welcomed the legislation as a significant step toward federal oversight of crypto markets. Nonetheless, they want Congress to outlaw passive returns based on the size or duration of stablecoin balances while still permitting genuine transaction-based incentives.
White House crypto adviser Patrick Witt has challenged the industry’s claims, contending that banks are primarily seeking to shield themselves from competition rather than pushing for stronger consumer protections.
Ethics row threatens bipartisan deal
Despite the erosion of institutional resistance from policing bodies, political ethics has emerged as one of the biggest obstacles to a Senate deal.
Democrats are demanding measures to curb conflicts of interest by limiting crypto-related financial holdings of elected officials and their families. Republican Senator Thom Tillis has also signalled that he will not support the bill unless it contains an acceptable ethics package.
Tillis is reported to be preparing a bipartisan ethics proposal to send to the White House for President Donald Trump’s approval. Democrats have not ruled out backing a vote ahead of the recess, but are seen as unlikely to support the current draft without further revisions.
Prediction market Polymarket currently puts the probability of Trump signing the CLARITY Act in 2026 at 30%. The Senate has until its scheduled 7 August recess to find a compromise and move the legislation forward in the present window.
Although MCCA’s endorsement removes a key line of opposition from large-city police forces, outstanding disputes over ethics provisions, DeFi oversight and stablecoin rewards mean the bill still faces a difficult path to securing the 60 Senate votes required to clear a filibuster.
