Democrat Wyden sides with crypto industry over BRCA as it becomes Clarity Act's make-or-break fight

Sen. Ron Wyden, the Oregon Democrat sent a letter this week to Senate Majority Leader John Thune and Senate Democratic Leader Charles Schumer. His ask: keep Section 604 in future drafts of the Clarity Act.

The disputed section is the Blockchain Regulatory Certainty Act, known as BRCA.

BRCA began as its own bill. It later got folded into the bigger Clarity Act, and it has since become one of the hardest sticking points as lawmakers try to move crypto legislation forward.

The measure creates a safe harbor for developers who don’t hold or control customer funds. It says plainly that these developers should not count as money transmitters. Sen. Cynthia Lummis, R-Wyo., introduced the original bill earlier this year. Wyden is its only cosponsor.

“Smart policy will empower law enforcement to do its job and facilitate innovation at the same time,” Wyden wrote in the letter, seen by The Block. “As the Senate continues its consideration of the Clarity Act, I urge you to include the Blockchain Regulatory Certainty Act in any legislative package.”

Pressure builds from Law Enforcement

Pressure on Section 604 built up in June. Two separate coalitions sent letters raising concerns about the developer safe harbor. Law enforcement groups said their main worries hadn’t been addressed. The Catholic anti-trafficking network went further, telling Senate leaders to rework the section before the bill moves ahead.

The first letter came from groups representing more than 70,000 prosecutors, sheriffs, and police officers. Signers included the National District Attorneys Association, NAAUSA, the International Association of Chiefs of Police, and the National Sheriffs’ Association. It went to Acting Attorney General Todd Blanche and White House crypto adviser Patrick Witt. The letter warned that broad exemptions could shield people who help move illicit money.

“Regulatory certainty should not come at the expense of accountability, transparency, victim protection, or public safety,” the letter read. The groups said the problem isn’t limited to Section 604 either. Other parts of the Clarity Act, they argued, could weaken transparency and leave gaps in anti-money-laundering safeguards that law enforcement relies on.

The second letter came from the Alliance to End Human Trafficking, a network of Catholic sisters and advocates. It went to Thune and Schumer, and it tied Section 604 directly to trafficking and money-laundering risks.

“We are particularly concerned that certain provisions under Section 604 could create broad carveouts and regulatory ambiguities that may make it more difficult to responsibly monitor illicit financial activity tied to trafficking, organized crime, child exploitation, sanctions evasion, and other forms of abuse,” the alliance wrote.

Industry support and Wyden’s rationale

Much of the crypto industry backs the section as reported by Cryptopolitan previously. Supporters say it gives software developers legal clarity and keeps innovation from moving overseas.

In his letter, Wyden said the provision would line up policy between the Department of Justice and the Financial Crimes Enforcement Network. The goal, he said, is to focus resources on people running unlicensed money transmitting businesses, not on ordinary coders.

“The provision also includes a common-sense exception that any non-custodial developers found to be transferring or using funds originating from illicit activity are not protected, ensuring that bad actors can still be held accountable while avoiding the unintended consequence of mistreating neutral software developers as financial intermediaries,” Wyden wrote.

The fight over BRCA is now one of the biggest unresolved pieces of the Clarity Act. Lawmakers are also stuck on whether new ethics rules are needed for officials with crypto ties, including President Donald Trump. Time is short. Congress leaves Washington in August, and the November elections are getting close.

The smartest crypto minds already read our newsletter. Want in? Join them.