Legislating Crypto Security
Lummis CLARITY Act seeks to boost crypto crime fight, expands Treasury powers amid uncertain vote
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Key Points
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Section 303 would let the Treasury designate foreign jurisdictions or financial institutions as a “primary money laundering concern” for digital asset activity, enabling targeted restrictions on crypto-related flows tied to such entities.
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The CLARITY Act would allocate funding—about $150 million—to FinCEN to bolster supervision over digital assets, signaling a concerted push on enforcement resources.
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Context on Lazarus Group’s impact: North Korea-linked hackers accounted for roughly two-thirds of crypto hacking losses in the first half of 2026 (about $643 million across 207 incidents), with major hits including the Ronin Bridge ($625 million) and a Bybit breach ($1.5 billion).
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Floor-vote timeline details: despite committee advances, Senate floor action remains uncertain, with leaders indicating no final vote before the August recess as lawmakers weigh the bill’s timing and political considerations.
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Market expectations for passage have shifted to a lower probability, with Polymarket pricing roughly a 33% to 37% chance of 2026 passage, reflecting timing and political dynamics ahead of potential floor action.
Senator Cynthia Lummis is pushing the CLARITY Act to crack down on crypto crime linked to North Korea's Lazarus Group. The bill would give the Treasury new powers to freeze suspicious crypto transactions and extend anti-money-laundering rules to exchanges and DeFi platforms, according to Benzinga.
The stakes are high. North Korea-linked hackers accounted for roughly two-thirds of all crypto hacking losses in the first half of 2026 — about $643 million across 207 incidents. Major hits include the Ronin Bridge hack ($625 million) and a Bybit breach ($1.5 billion).
What the CLARITY Act Would Actually Do
The bill's Section 303 would let the Treasury label foreign jurisdictions or banks as a "primary money laundering concern" for digital asset activity. That label triggers targeted restrictions on crypto flows tied to those entities, according to Yahoo Finance.
The bill would also allocate about $150 million to FinCEN — the Treasury's financial crimes unit — to boost oversight of digital assets. Exchanges and DeFi platforms would face Bank Secrecy Act rules for the first time. Firms that freeze questionable transfers would get a civil liability safe harbor. Transactions linked to illicit activity could be held for 30 to 180 days.
Lummis: This Bill Targets Lazarus Group Directly
Sen. Lummis (R-WY) says the bill is built to counter state-backed crypto theft. "The CLARITY Act will strengthen sanctions compliance against North Korea-based hackers and other bad actors," she said, according to Yahoo Finance.
Supporters say the bill closes real regulatory gaps. Right now, crypto exchanges and DeFi platforms are not required to follow the same anti-money-laundering rules as banks. That gap, backers argue, gives groups like Lazarus Group room to move billions in stolen funds without triggering alarms.
Warren Calls It a Loophole, Not a Crackdown
Not everyone agrees the bill is tough on crime. Sen. Elizabeth Warren said in a video statement that the CLARITY Act would actually help criminals move money. She claimed it would benefit "criminals and cartels" — and even suggested it helps former President Trump, according to ZeroHedge.
Warren's core concern is that the safe harbor provisions — protections for firms that freeze or flag transactions — could be used as cover to avoid real oversight. Critics say the bill's language is broad enough to create more gaps than it closes.
Senate Floor Vote Remains Uncertain Despite Committee Progress
The CLARITY Act has cleared key committees in both the House and Senate. But a full Senate floor vote is still not scheduled. Leaders have signaled no final vote before the August recess, according to Benzinga.
Markets reflect that uncertainty. Polymarket currently prices the bill's 2026 passage at just 33% to 37%. Timing and political dynamics — including the Warren-Lummis split — are weighing on those odds. The bill's fate now depends on whether Senate leadership puts it on the calendar before lawmakers leave for summer.
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