Written by Thomas Dixon – Chief of Police, City of Clinton, KY
As a local police chief, I’ve learned that criminals are always looking for an advantage. When law enforcement closes one door, they look for another way around the law.
Today, one of those new avenues is cryptocurrency.
Let me be clear: this isn’t an argument against digital currency or new technology. Innovation is part of America’s future, and responsible businesses deserve clear rules to operate. But public safety has to come first. Congress shouldn’t create laws that unintentionally make it easier for criminals to hide their money.
That’s why I’m concerned about the CLARITY Act.
For decades, banks have operated under commonsense rules designed to stop money laundering and financial crime. They verify customers’ identities, monitor questionable transactions and report suspicious activity. Those safeguards have helped law enforcement solve crimes, recover stolen money and dismantle criminal organizations.
Unfortunately, many digital asset platforms don’t operate under those same standards. Criminals know it, and they’re taking advantage of it every day.
Here in Kentucky, we’ve seen firsthand what fentanyl has done to our communities. We’ve also watched online scams explode, especially those targeting senior citizens. Increasingly, these crimes involve cryptocurrency.
We’ve seen scammers impersonate law enforcement or government agencies, convincing victims to withdraw their savings, feed cash into cryptocurrency ATMs and send the money to digital wallets controlled by criminals. Once that money is sent, it’s often gone for good.
The problem is that the CLARITY Act doesn’t fully close the regulatory gaps criminals are already exploiting. In fact, law enforcement organizations across the country have warned that one provision — Section 604 — could actually make investigations more difficult by exempting certain cryptocurrency services designed to conceal where digital money comes from and where it goes.
When criminals can hide financial transactions, law enforcement loses one of its most valuable investigative tools: following the money.
Without the ability to trace funds, obtain account information or freeze criminal proceeds when probable cause exists, it becomes much harder to recover stolen money and identify suspects. That affects local police departments like ours that work every day with state and federal partners to combat drug trafficking, fraud, child exploitation and organized crime.
The answer isn’t to abandon digital assets. It’s to hold everyone who moves money to the same basic standard.
If banks must know their customers and report suspicious activity, digital asset platforms should too. No special carve-outs. No loopholes. The same anti-money laundering standards should apply to every business that moves money, regardless of the technology it uses.
Kentuckians expect law enforcement to keep up with criminals who constantly adapt to new technology. We’ll continue doing our part. But Congress shouldn’t make our job harder by creating new blind spots for drug traffickers, scammers and organized criminal networks.
The CLARITY Act should provide clarity for legitimate businesses — not cover for criminals.
Congress still has time to strengthen this legislation and close the gaps that law enforcement leaders have identified. For the sake of Kentucky families and every community we serve, I hope lawmakers get it right.
