Anti-trafficking group urges U.S. Senate to tank crypto bill

Among other changes, the massive bill package would precisely define cryptocurrencies and require cryptocurrency brokers and dealers to register with the Commodity Futures Trading Commission. They would also have to follow the same Bank Secrecy Act rules as normal banks do.

The bill also clearly defines the roles of the CFTC and the Security and Exchange Commission in the digital asset market to avoid confusion for companies. It tasks the SEC with regulating the initial fundraising stages for token-selling projects, while CFTC would oversee the trading, buying, and selling of digital commodities.

While supporters have praised the legislation for finally addressing the “gray areas” of digital asset markets, a certain provision in the bill has raised alarm bells in anti-trafficking groups.

Section 604 of the bill effectively creates a safe harbor for developers and providers of digital asset technology or blockchains, so long as they do not directly control users’ funds. That exempts such actors from having to register as money transmitters, and consequently, from certain anti-money laundering safeguards.

“Our concern is that the exemption is written too broadly and could extend beyond truly neutral software developers to platforms and services that criminals actually use to move and obscure money,” Katie Gosewisch, executive director of the Alliance to End Human Trafficking, told The Center Square.

“Traffickers are sophisticated. They look for the parts of the financial system where scrutiny is weakest, and they exploit them,” she added. “If Congress creates ambiguity about who is responsible for monitoring suspicious activity, following the money in trafficking and child exploitation cases becomes harder.”

Gosewisch argued that lawmakers “can absolutely protect legitimate innovation and software development without creating new blind spots for bad actors to exploit. Section 604 needs to draw that line much more clearly.”

While the Clarity Act passed the U.S. House months ago in a bipartisan vote, its future in the Senate appears less certain.

The bill needs at least 60 votes to clear the chamber filibuster, and many Democrats are refusing to support it unless Republicans add provisions targeting President Donald Trump’s recent cryptocurrency activities.