Senator Elizabeth Warren has intensified her opposition to the CLARITY Act, a crypto market structure bill, warning it would create a “ticket to sanctions evasion.” The bill’s path remains uncertain amid a shrinking Senate calendar, with passage odds falling to 45%. Critics, including former U.S. National Security Council official Richard Nephew, argue that proposed DeFi exemptions would enable illicit finance. The White House’s crypto advisor dismissed Warren’s concerns, but bipartisan support remains fractured. Industry advocates warn that failure to pass the bill before the August recess could delay comprehensive crypto regulation until the 2030s.
Democratic Senator Elizabeth Warren has maintained her strong opposition to the broader crypto market bill, the CLARITY Act. Amid increasing uncertainty about the bill’s path and the industry’s push for a Senate floor vote, Sen. Warren said, “As currently drafted, the CLARITY Act is a ticket to sanctions evasion.”
She echoed concerns raised by Richard Nephew, a former special envoy for Iran and director for Iran at the U.S. National Security Council. Nephew called out the Senate for pushing the CLARITY Act with broader exemptions for DeFi and weak anti-money laundering requirements.
For him, the recent freezing of over $1 billion of Iranian crypto by the U.S. Treasury would be impossible with the DeFi legal exemptions proposed in the bill. He added, “The bill would leave parts of the crypto ecosystem vulnerable to exploitation by terrorists, sanctions evaders, fraudsters, and other illicit actors under the guise of technological neutrality.”
The banking lobby is also against the bill, initially opposing it over stablecoin yield. Their recent opposition has increasingly been framed using the “illicit finance” narrative.
In response to Sen. Warren, White House Chief Crypto Advisor Patrick Witt directed a jab at the lawmaker. He commented, “I wonder how heavily your colleagues will weigh your advice on crypto legislation after the train wreck you just orchestrated in Maine.”
His jab aimed to discredit Sen. Warren’s judgment and endorse Graham Platner for the Maine Senate race, who recently stepped down after an alleged sexual scandal. However, deflective politics won’t wish away key issues like ethics, especially after President Donald Trump’s massive $1.4 billion crypto profits.
If all 53 Republicans support the bill on the floor vote, they will still need seven Democrats to hit the 60-vote threshold to pass it. A section of pro-crypto Democrats has vowed to withhold support if ethics are not addressed.
Surprisingly, Section 604 — the so-called DeFi exemptions — has seen support from some Democrats like Sen. Ron Wyden. For Wyden, who co-sponsored the section with Sen. Cynthia Lummis, the provision will allow the Department of Justice to pursue illicit actors while protecting developers of non-custodial software. Some law enforcement groups are now supporting the provision after recent talks.
With a shrinking Senate calendar, the odds of the bill’s passage have dropped to 45%. The industry is concerned that failure to pass the bill before the August recess could push another window to the 2030s.
