A national Catholic anti-trafficking network sent an open letter to Senate leadership on June 22, urging lawmakers to strengthen financial crime safeguards in the Digital Asset Market Clarity Act before bringing the bill to a floor vote. The Alliance to End Human Trafficking (AEHT), joined by more than 80 signatories including Catholic leaders, women religious, survivor advocates, and representatives from the Jesuit Conference's Office of Justice and Ecology, addressed the letter directly to Senate Majority Leader John Thune and Minority Leader Chuck Schumer. The total number of signatories reached nearly 100, according to The Block.

The bill in question, H.R. 3633, is one of the most sweeping crypto market-structure bills Congress has considered. It passed the House before clearing the Senate Banking Committee 15 to 9 on May 14, 2026, and is now awaiting a full Senate vote, though its path is complicated by a 60-vote threshold and unresolved amendment disputes. The bill carves out jurisdictional boundaries between the Securities and Exchange Commission and the Commodity Futures Trading Commission, establishes a framework for stablecoin oversight, and creates a liability exemption for decentralized finance (DeFi) developers. Its introduction comes after Congress already set one digital-asset compliance benchmark: the GENIUS Act, signed into law on July 18, 2025, which established a stablecoin anti-money laundering and counter-terrorism financing framework. Critics argue the Clarity Act should build on that foundation rather than erode it.

The Developer Exemption at the Center of the Fight

The AEHT's core objection centers on what the bill does not require. Under Section 604, non-custodial software developers, meaning coders who build DeFi protocols but never directly handle user funds, are excluded from the definition of money transmitters. This means they are largely exempt from Bank Secrecy Act obligations unless they can be shown to have "knowingly" directed criminal proceeds. Critics say that standard sets the bar so high that accountability becomes nearly impossible to establish in practice.

The bill also limits Treasury's authority over cryptocurrency mixers and tumblers, tools designed to obscure the origin of funds, to a study rather than an enforceable regulatory framework. Unhosted wallets (crypto accounts with no custodian), decentralized exchanges, and cross-chain bridges all fall outside mandatory anti-money laundering requirements.

"Human traffickers are quick to exploit new technologies when oversight fails to keep pace," said Katie Boller Gosewisch, executive director of AEHT. She added that while the organization supports responsible innovation, Congress must ensure "strong safeguards that protect vulnerable people" are in place before advancing the legislation.

The AEHT is not alone in raising concerns about law enforcement implications. The National Sheriffs' Association and the National District Attorneys Association have separately written to Congress opposing the developer exemption, arguing it creates an overly broad liability shield. Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, called amendments added before the committee vote "insufficient half measures."

What the On-Chain Data Shows

The timing of the letter is not incidental. Crypto flows to services suspected of involvement in human trafficking grew 85% year-over-year in 2025, reaching hundreds of millions of dollars across identified services, according to Chainalysis's 2026 Crypto Crime Report. Stablecoin use among trafficking networks is expanding, while Monero, a privacy-focused cryptocurrency, is increasingly preferred by vendors of child sexual abuse material. One such site alone generated over $530,000 using more than 5,800 cryptocurrency addresses since July 2022.

Total illicit crypto flows reached $158 billion globally in 2025, a sharp rebound from $64.5 billion in 2024, per TRM Labs. That figure still represents roughly 1.2% of total on-chain volume, but the absolute scale has created urgency among regulators and advocates alike. North Korea-linked hackers, for example, exploited a $280 million hack of the lending protocol Aave in 2026 and used Tornado Cash, a sanctioned mixer, to obscure wallet identities, according to the Bank Policy Institute.

The Clarity Act, as written, leaves that category of tool in a regulatory gray zone.

Global Stakes Beyond U.S. Borders

For crypto users and policymakers outside the United States, the outcome of this debate carries direct consequences. U.S. regulatory standards effectively function as a global floor because American-linked platforms serve users worldwide.

Pakistan passed its Virtual Assets Act in March 2026, establishing a FATF-aligned anti-money laundering framework under the Pakistan Virtual Assets Regulatory Authority. South Africa went further, implementing the OECD's Crypto-Asset Reporting Framework with an effective date of March 1, 2026, and formal legislative enactment in April 2026, requiring domestic exchanges to report transaction data to tax authorities and share it internationally.

Both countries have moved toward tighter standards at the same moment that the Clarity Act trends toward developer exemptions and limited mixer oversight.

The gap matters most in regions where trafficking networks are most active. Chainalysis data shows that crypto transactions tied to forced labor compounds in Myanmar, Cambodia, and Thailand funnel funds through U.S.-regulated or U.S.-adjacent platforms. The stakes extend further into South Asia. India has registered 49 Virtual Digital Asset Service Providers under its compliance framework but faces persistent gaps in meeting FATF standards. Bangladesh maintains an outright crypto ban, yet activity has migrated underground rather than disappearing. Analysts warn that weaker U.S. anti-money laundering standards create exploitable offshore channels in precisely these markets, where enforcement capacity is already strained. Together, these cases illustrate why the Clarity Act's compliance choices carry consequences well beyond American borders.

A weaker U.S. anti-money laundering regime widens that conduit.

What Comes Next

The Clarity Act still needs 60 Senate votes and faces a crowded legislative calendar. AEHT and allied advocates have called on Congress to close the oversight gaps they have identified in the bill. The Bank Policy Institute has put forward a set of specific legislative proposals to address those gaps: extending Bank Secrecy Act obligations to DeFi actors who profit from protocol operations, establishing direct regulatory authority over mixers rather than relegating oversight to a study, and bringing unhosted wallets and cross-chain bridges within the AML framework.

The Bank Policy Institute has also proposed an "economic benefit test" that would require any party profiting from DeFi operations to meet full compliance standards, regardless of whether they directly custody user funds.

Supporters of stricter rules point to the GENIUS Act's stablecoin AML provisions as proof of concept. Congress has already demonstrated it can write enforceable digital-asset compliance rules, and the Clarity Act presents an opportunity to extend that approach rather than carve out new exemptions from it.

Whether Senate leadership incorporates those changes or advances the bill as is will determine whether the Clarity Act becomes a floor or a ceiling for global crypto compliance standards.