Clarity Act: Major Law Enforcement Shift Paves Way for July Vote

Key Takeaways

The Major County Sheriffs of America dropped its opposition to the Digital Asset Market Clarity Act on July 3, removing one of the last organized law enforcement objections in the Senate.

In a letter, shared on X by journalist Eleanor Terrett, addressed to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren, the organization confirmed the reversal of the position it had staked out in a May 14 filing. “Based on that continued review, MCSA is now neutral on H.R. 3633,” the group wrote, with President Sheriff Bob Gualtieri signing the document.

🚨NEWS: The Major County Sheriffs of America (MCSA) has shifted to a “neutral” position on the Clarity Act after what it describes as “continued discussions in recent days regarding parts of Section 604,” aka the Blockchain Regulatory Certainty Act.

In a letter to Senate Banking… pic.twitter.com/24XIZTfWHR

— Eleanor Terrett (@EleanorTerrett) July 3, 2026

Neutrality is not endorsement, and the letter makes that distinction deliberately. MCSA stopped short of backing the bill and instead attached a list of conditions it wants addressed before final passage.

Section 604 Was the Sticking Point

The dispute centered on Section 604, which incorporates the Blockchain Regulatory Certainty Act. The provision shields non-custodial software developers and distributed ledger service providers from liability for illicit activity committed by users of their platforms.

In its May letter, MCSA argued the language could open a loophole for bad actors and complicate criminal investigations involving digital assets. The Fraternal Order of Police and the National Sheriffs’ Association raised similar objections, warning the provision might exempt certain mixers and DeFi activities from money transmission rules.

Supporters of the section pushed back on that reading. Blockchain intelligence firm TRM Labs noted the text preserves the criminal carve-out under 18 U.S.C. § 1960(b)(1)(C), the statute prosecutors have relied on in mixer-related cases. According to the July 3 letter, discussions with the administration provided additional clarity on how Section 604 would be interpreted and implemented, which proved sufficient to move the sheriffs off active opposition.

What the Sheriffs Still Want

MCSA is now asking Congress to amend the bill so that state and local law enforcement receive a formal role in the Treasury study required under Section 309, along with seats on any advisory bodies or interagency working groups the legislation creates.

The reasoning is practical rather than political. State and local agencies investigate the overwhelming majority of crimes involving digital assets, the letter argues, spanning narcotics trafficking, fraud, ransomware, organized retail theft, and terrorism financing. The group also wants the federal framework paired with funding for training, technology, and forensic capabilities at the local level.

Crypto investor Mark Chadwick, who has tracked the bill’s progress, wrote on X that the sheriffs’ resistance had been among the most significant obstacles in the Senate. “One more major hurdle down,” Chadwick posted.

Why This Matters for the Bill’s Timeline

The procedural math explains the urgency. The CLARITY Act passed the House 294-134 back in July 2025, then spent months stalled in the Senate. The Senate Banking Committee finally advanced its version 15-9 on May 14, with all 13 Republicans joined by two Democrats. The bill was placed on the Senate Legislative Calendar under General Orders on June 1, making it formally eligible for a floor vote.

Senator Cynthia Lummis, the bill’s lead sponsor, told Fox Business on June 24 that negotiators expect to finalize the Senate compromise text around the July 4 recess and plan to “move in July,” the first public floor-date commitment from a sponsor. The window is narrow. The Senate returns from recess on July 13, and the August break begins around August 10, leaving roughly four weeks of floor time. The bill needs 60 votes to clear the Senate, must be reconciled with the Senate Agriculture Committee’s Digital Commodity Intermediaries Act, and the combined text must then be squared with the House-passed version. Majority Leader John Thune has not yet announced a floor date, and he has signaled the National Defense Authorization Act takes priority in the week of July 13, which could push CLARITY consideration to late July.

Removing a credible law enforcement objection matters in that context. Senate offices weigh input from policing organizations heavily on politically sensitive bills, and Democrats who supported the committee version conditioned their floor votes on further progress. Every withdrawn objection could make those votes easier to deliver.

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The Obstacles That Remain

Neutrality from the sheriffs does not clear the field. Banking groups continue to press for restrictions on stablecoin yield, arguing that yield-bearing tokens function like unregulated deposit products and could pull funds out of traditional banks. That dispute has been the primary drag on the bill since the January draft.

The ethics question has also resurfaced. Senator Kirsten Gillibrand renewed calls for provisions barring elected officials from issuing their own tokens, following reports that the Trump family’s crypto ventures generated over $1.4 billion in 2025, with more than $630 million tied to the Official Trump memecoin. Democrats on the Banking Committee flagged the ethics language as a condition for floor support back in May.

For the crypto industry, the MCSA shift is a net positive that narrows the list of open objections to two well-defined disputes. Whether that is enough to secure 60 votes before August may determine if the United States gets a market structure law in 2026 at all.

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