Section 604 becomes the center of controversy
A major debate is unfolding around Section 604 of the US Clarity Act, with anti-human trafficking organizations and crypto legal experts taking sharply different positions. The dispute centers on language stating that developers who do not control user funds should not be treated as money transmitters. Critics argue that such wording could be used by some third-party platform developers to avoid liability, even if their software is involved in transactions connected to human trafficking.
Katie Boller Gosewisch, executive director of the Alliance to End Human Trafficking, said this definition is the source of the group’s concern. The organization, together with Catholic Charities, sent a letter to Senate Majority Leader John Thune and Minority Leader Chuck Schumer urging lawmakers to revisit the bill’s language and close possible loopholes.
Crypto legal experts say it does not create a new shield
Crypto lawyers see the issue very differently. In comments to CoinDesk, Rebecca Rettig said Section 604 does not introduce a new liability shield but instead clarifies the long-standing US anti-money laundering framework. In her view, excluding developers without custody of client assets from the definition of money transmitters is consistent with the Bank Secrecy Act and existing guidance from FinCEN, the Financial Crimes Enforcement Network.
Rettig also stressed that the bill does not remove liability from actors who actually control user funds, nor does it override other criminal statutes. She noted that prosecutors can still pursue developers who knowingly facilitate illegal conduct under existing anti-money laundering laws, including 18 U.S.C. § 1956.
The real divide is current reality versus future abuse
The broader disagreement is about legislative design: should the law reflect today’s technological structure, or should it be written primarily to guard against possible future abuse? Gosewisch warned that even if the clause is not intended to weaken enforcement today, sophisticated criminal networks could later use the language to create reasonable doubt in court.
She urged Congress to examine how malicious actors may exploit statutory wording over time, framing the issue as a long-term legal risk rather than a narrow technical question. Her concern is that ambiguity could eventually complicate accountability in serious criminal cases.
Both sides still want stronger anti-trafficking enforcement
Despite the disagreement, both camps support tougher tools to combat human trafficking. Gosewisch called for stronger federal coordination and more focused financial crime investigations. Rettig, meanwhile, pointed to the open-ledger nature of blockchain transactions as a potentially valuable aid for law enforcement.
As debate over the Clarity Act continues, the broader legal question remains unresolved in both policy circles and US courts: how far liability should extend for developers of decentralized crypto protocols.