Draft US Clarity Act released… concerns it will “significantly expand” government surveillance powers

Concerns have emerged that the Crypto Market Structure Act (the Clarity Act), recently released by the US Senate, would significantly expand regulators’ surveillance authority.

According to The Block on the 14th (local time), crypto market research firm Galaxy Research said in a report the previous day that “the US Senate’s draft Clarity Act defines the Treasury Department’s authority far more broadly than the bill discussed in the House,” adding that “if these powers are enacted into law, it would represent the largest expansion of government financial surveillance authority since the US PATRIOT Act.”

Galaxy Research noted that “the crux of the debate lies in how the Clarity Act addresses illicit finance.” Under the Senate draft, the Treasury Department would be able to swiftly freeze digital-asset transactions it deems at risk of money laundering without a court order. The draft also includes provisions to extend the Treasury’s sanctions and anti-money-laundering obligations to areas such as DeFi (decentralized finance).

Previously, on the 13th, the US Senate released the full text of the draft Clarity Act negotiated between Republicans and Democrats. The Senate Banking Committee will hold a markup on the bill on the 15th. A markup is the committee stage in which lawmakers conduct a final review before sending a bill to the full chamber. The Senate Agriculture Committee postponed its markup schedule for the Clarity Act to later this month.