Alliance to End Human Trafficking Raises Red Flags Over Clarity Act's Section 604
A prominent anti-human trafficking organization has stepped forward to challenge a key provision within the proposed Clarity Act, warning that its language could inadvertently shield crypto developers from accountability when their platforms are exploited for trafficking-related financial activity.
The Alliance to End Human Trafficking is calling on lawmakers to take a closer look at Section 604 of the legislation. According to Katie Boller Gosewisch, executive director of the organization, the central issue lies in language that exempts developers from being classified as money transmitters if they do not exercise control over user funds. Her concern is that this carve-out could allow bad actors to exploit the provision as a legal refuge, particularly when their software becomes a conduit for trafficking payments.
The Alliance, alongside Catholic Charities, formalized their concerns in a letter addressed to Senate Majority Leader John Thune and Senate Minority Leader Chuck Schumer, urging Congress to revisit the disputed language before the bill moves forward.
Opposing voices in the debate push back on that characterization. Rebecca Rettig, who participated alongside Gosewisch and attorney Renato Mariotti in a discussion on CoinDesk's The Policy Protocol, argued that Section 604 does not introduce any new legal protections. Instead, she contended the provision simply restates established policy under the Bank Secrecy Act and existing FinCEN guidance — clarifying that developers without custody of user assets fall outside the money transmitter definition. Rettig also emphasized that other criminal statutes, including federal money laundering law under 18 U.S.C. § 1956, remain fully intact as prosecutorial tools against developers who knowingly enable illegal activity.
At the heart of the disagreement is a fundamental question about legislative foresight. Gosewisch acknowledged she is not a legal expert but argued that Congress must think ahead about how sophisticated criminals might weaponize statutory language over time. She drew a parallel to civil litigation in the hospitality industry, suggesting that even entities not directly involved in criminal acts may still bear a broader duty of care.
For her part, Rettig maintained that the bill preserves accountability for parties who do control user funds and does not create blanket immunity across the board.
Despite their disagreements, both sides expressed support for stronger enforcement efforts targeting human trafficking. Gosewisch advocated for reinstating a federal human trafficking coordinator and ramping up financial crimes prosecutions linked to trafficking networks. Rettig highlighted blockchain's growing role as an investigative asset, noting that the transparency of public ledgers has become an increasingly valuable tool for law enforcement agencies tracking illicit transactions.
The broader conversation over developer liability in the crypto space remains unresolved, with the Clarity Act still under congressional consideration and courts continuing to evaluate cases involving decentralized protocol developers. As these debates evolve, the intersection of financial regulation and human rights advocacy is likely to remain a contentious focal point in crypto policy discussions.
