The Major County Sheriffs of America has moved from opposing the CLARITY Act to taking a neutral stance, easing one of the bill’s biggest law-enforcement pressure points without exactly rolling out a welcome mat.
- MCSA is now neutral on H.R. 3633
- Section 604 is still the main fight
- Law enforcement wants safeguards, not a free pass
- Neutrality helps, but it does not equal support
The Major County Sheriffs of America (MCSA), a national group representing sheriffs in major counties, says it is now neutral on the Digital Asset Market CLARITY Act, H.R. 3633. That shift matters because law enforcement opposition has been one of the more serious political obstacles around crypto market structure legislation.
In a July 3 letter to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren, MCSA said discussions with the administration and state and local law enforcement provided “additional clarity” on how Section 604 would be interpreted and implemented. The group said it had continued reviewing the bill since its May 14 letter and wrote:
“Based on that continued review, MCSA is now neutral on H.R. 3633, ”
That is a meaningful change, but not a clean endorsement. Neutral means MCSA is no longer actively opposed, not that it has fallen in love with the bill. It still wants targeted amendments and more direct law-enforcement involvement before anyone declares victory.
Section 604, also called the Blockchain Regulatory Certainty Act, sits at the center of the dispute. The provision deals with the treatment of non-custodial software developers and distributed ledger service providers. In plain English, that means people or firms that build blockchain software but do not hold customer funds, or provide services around distributed ledger systems, should not automatically be treated like traditional money transmitters.
That custody question is the heart of the policy fight. If a company controls customer money, regulators have a much easier case for treating it like a financial intermediary. If it just writes software and never takes control of user funds, the legal line gets much messier.
Supporters of Section 604 argue that the provision is meant to protect developers who do not control customer funds while preserving criminal liability for anyone who knowingly facilitates illicit transactions. That is a reasonable principle. Open-source builders should not be treated like crooks just because bad actors can misuse their code.
Law enforcement groups are still worried the language goes too far. The Fraternal Order of Police and the National Sheriffs’ Association have argued that Section 604 of Digital could make it harder to prosecute financial crimes involving cryptocurrency. Their concern is not theoretical hand-waving: they say the provision could leave prosecutors with fewer tools when criminals use crypto infrastructure to hide where money came from and where it went.
That is especially sensitive when it comes to mixers and tumblers, tools that obscure transaction trails, and to decentralized finance, or DeFi, which refers to blockchain-based financial services that run without traditional intermediaries. These technologies can support legitimate privacy and innovation. They can also become a convenient layer of cover for laundering money if lawmakers write the rules badly. Crypto does not get a moral halo just because it uses words like “decentralized.”
MCSA is not pretending the criminal-use problem does not exist. The group said digital assets are increasingly being used in fraud, ransomware, narcotics trafficking, child exploitation, organized retail theft, and terrorism financing. That is a serious list, and it is one reason law enforcement wants the bill written with more precision, not less.
At the same time, MCSA wants Congress to avoid turning every non-custodial developer into a regulatory target. The group wants targeted amendments that would better support agencies investigating the criminal use of digital assets. It also wants state and local law enforcement included in the Treasury Department study required under Section 309, along with a role in future advisory bodies and interagency working groups.
That request makes sense. Local sheriffs’ offices and police departments are often the ones dealing with the actual fraud cases, extortion schemes, laundering trails, and wallet traces. If Congress is going to write rules for crypto enforcement, the people doing the work on the ground probably should not be left outside the door like they’re waiting for a bus that never comes.
MCSA also called for more funding for training, blockchain forensic tools, technology, and investigative resources. That part matters. Policymakers love to talk about crypto enforcement as if tracing blockchain activity is just a matter of squinting at a spreadsheet and believing in justice. In reality, good investigations require people, tools, and training.
The neutrality shift may also reduce one source of resistance for lawmakers trying to move the bill forward. Investor Mark Chadwick said the change could “ease law enforcement concerns” and strengthen the bill’s momentum and chances of passage. That may be true, but it should not be oversold. One major law-enforcement group softening its stance is helpful; it does not mean the bill is suddenly safe or inevitable.
The bigger issue is still the same: how do you protect non-custodial developers and software builders without giving criminals a loophole wide enough to drive a wash-traded, mixer-hopping money trail through? That is the actual policy problem, and it is not solved by slogans from either camp.
Crypto advocates are right that bad regulation can crush open-source development and punish people who never touch user funds. Law enforcement is right that sloppy carve-outs can be abused by people hiding behind “software” while helping move dirty money. Both arguments have merit. The job of Congress is to draw the line with enough precision to catch real criminals without choking off legitimate innovation.
MCSA’s new position suggests lawmakers may be inching toward that middle ground. Whether they get there cleanly is another matter entirely.
Key questions and takeaways
-
Did MCSA change its position on H.R. 3633?
Yes. MCSA says it is now neutral on the bill after continued review and further discussions around Section 604. -
Does neutral mean MCSA supports the CLARITY Act?
No. Neutral means it is no longer opposing the bill outright, but it still wants amendments and a stronger law-enforcement role. -
Why is Section 604 such a flashpoint?
It turns on the question of how to regulate non-custodial developers and distributed ledger service providers without treating software builders like money transmitters. -
What are law enforcement groups worried about?
They say Section 604 could make some crypto-related financial crimes harder to prosecute and could complicate cases involving mixers, tumblers, and DeFi tools. -
What does MCSA want beyond neutrality?
It wants targeted amendments, participation in the Section 309 Treasury study, a role in future advisory bodies and working groups, and more funding for investigations. -
Does this make passage of the bill certain?
No. MCSA’s shift may reduce one source of opposition, but Senate passage still depends on broader negotiations and whether other critics soften their stance.
The bottom line is simple: neutrality is not an endorsement, but it is better than a hard no. The fight now is over whether Congress can draw a clean legal line between software, custody, and criminal intent without handing either side a bad law.
Further reading
A few extra angles on the CLARITY fight, from Hill momentum to policy critique and internal drama:
- CLARITY Act Update Today: Crypto Bill Gains Momentum After
- National Sheriffs’ Association Letter on H.R. 3633
- The Blockchain Regulatory Certainty Act Is Sound Policy
- CLARITY Act Stalls Over Trump Ethics Fight and Section 604
- a16z Calls Senate CLARITY Act Crypto’s 1933 Moment as U.S. Regulation Push Advances
- CLARITY Act Deadline Looms: April Crunch or 2027 Delay for Crypto Regulation
