Major US Police Group Backs CLARITY Act Draft, But DeFi and Stablecoin Disputes Keep Passage Odds at 30%

Headline: Major US police group backs CLARITY Act draft — but DeFi, stablecoin and ethics fights keep its chances at just 30% A leading U.S. law-enforcement group has endorsed the latest CLARITY Act draft, marking a significant shift in institutional support for the Senate’s proposed crypto framework — but major disputes over political ethics, DeFi liability and stablecoin reward rules leave the bill’s prospects uncertain ahead of an August recess. What changed - The Major Cities Chiefs Association (MCCA) told Senate Banking Chair Tim Scott and ranking member Elizabeth Warren that recent revisions address prior law-enforcement concerns. The group highlighted added enforcement provisions and expanded roles for state and local agencies in Sections 10203, 10204 and 10309, saying those changes improve investigators’ ability to trace and prosecute financial crimes involving digital assets. - MCCA joins other police organizations that have moved toward support: the National Organization of Black Law Enforcement Executives was the first major endorsement; the Federal Law Enforcement Officers Association offered conditional backing while urging stronger DeFi accountability; the National Fraternal Order of Police reversed earlier opposition after reviewing Blockchain Regulatory Certainty Act revisions; and Major County Sheriffs of America withdrew formal opposition and adopted a neutral stance while seeking greater state/local input in Treasury studies and advisory panels. Why law enforcement shifted — and what still worries them - Earlier resistance centered on protections in the Blockchain Regulatory Certainty Act that shield non-custodial developers and infrastructure providers from being treated as money transmitters when they don’t control customer funds. Supporters say those protections prevent criminal prosecutions of open-source developers whose tools are misused. - Critics warned the language was too broad and could let DeFi operators, mixers and certain services evade registration and accountability, complicating efforts to trace illicit funds or recover victims’ assets. - Revisions seek to balance those concerns: developers remain protected in general, but the draft clarifies that anyone who knowingly or intentionally facilitates money laundering or other crimes can still be prosecuted. The bill also preserves criminal-enforcement powers and boosts state and local roles — but some Democratic senators and prosecutors (led by Senator Catherine Cortez Masto) want further narrowing of protections to ensure accountability. Banking industry pushes on stablecoin rewards - The banking sector supports a federal regulatory framework for digital assets but wants tighter limits on stablecoin reward mechanics. A coalition of 134 banking association officials and senior bank executives urged lawmakers to strengthen Section 10404, which bans stablecoin issuers from paying interest but allows certain rewards tied to payments, memberships and activities. - Banks warn exchanges could exploit those exceptions to deliver interest-like returns on stablecoin balances, potentially siphoning deposits from regulated banks and reducing funding for mortgages, farm loans and small-business credit. - The American Bankers Association and five other trade groups called the bill an important step but asked Congress to bar passive returns tied to the size or duration of stablecoin holdings while preserving genuine transaction-based rewards. - White House crypto adviser Patrick Witt pushed back, arguing the banking industry’s complaints reflect a desire to shield incumbents from competition rather than protect consumers. Ethics remains a major political hurdle - Political ethics rules — restrictions on crypto holdings by elected officials and family members — are a key sticking point. Democrats want explicit limits; Republican Senator Thom Tillis has said he won’t back the bill without an acceptable ethics provision. - Tillis reportedly plans to send a bipartisan ethics proposal to the White House for President Trump’s approval. Democrats haven’t ruled out voting before the recess but are unlikely to support the current text without additional changes. Timeline and odds - The Senate’s recess begins August 7, giving lawmakers a short window to reconcile competing amendments and build a bipartisan majority. - Polymarket traders currently put the probability of President Trump signing the CLARITY Act in 2026 at roughly 30%. Bottom line MCCA’s endorsement removes one significant institutional obstacle, but unresolved fights over DeFi liability, stablecoin reward mechanics and political-ethics language mean the CLARITY Act still faces an uphill climb. Without a bipartisan compromise that satisfies law enforcement, banks and ethics reformers, securing the 60 votes needed to overcome a filibuster will be a heavy lift before the August recess.