Senator Elizabeth Warren Fires Major Criticism at Clarity Act, Dubs It “Sanction Evasion Tool”

US Senator Elizabeth Warren has taken swipes at the CLARITY Act, describing it as a tool with potential for evading economic sanctions. Criticism of the market structure bill has reached an all-time high amid falling odds of it becoming law before the end of the year.

Elizabeth Warren slams CLARITY Act over lax AML rules

In an X post, Warren disclosed that the wording of the CLARITY Act creates a loophole for malicious entities to evade US sanctions. The US senator hinged her position on arguments put forward by Richard Nephew, former Iran director at the White House National Security Council (NSC)

“As currently drafted, the Clarity Act is a ticket to sanctions evasion,” said Warren.

In an essay shared on X by Senator Warren, Nephew noted that the CLARITY Act will allow bad actors to skirt anti-money laundering (AML) rules designed to protect national security. According to Warren, if passed into law, the CLARITY Act will make it difficult for law enforcement to investigate and prosecute these bad actors.

Particularly, critics argue that the bill’s designation of software developers as non-money transmitters is broad. They argue that the CLARITY Act will protect coders of DeFi platforms used to facilitate illicit transactions from legal accountability. 

The concerns reached a crescendo after the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an alert that Iran was using cryptocurrencies to sidestep economic sanctions. In his essay, Nephew predicted that Russia, North Korea, and China would use digital assets to “bypass controls and expand malign influence.”

Elizabeth Warren has emerged as one of the strongest critics of the CLARITY Act among her peers in Congress, expressing acute disapproval toward the bill. JPMorgan CEO Jamie Dimon has previously slammed the CLARITY Act for failing to subject crypto service providers to the same compliance requirements as traditional financial institutions.

Proponents rally support for the bill

Despite the wave of opposition to the bill, the CLARITY Act has received fresh support from diverse quarters. The latest is Senator Ron Wyden writing a letter to the Senate leadership asking them to preserve the Blockchain Regulatory Certainty Act in any version of the CLARITY Act.

His comments come in opposition to critics seeking to eliminate the language of section 604 of the CLARITY Act, citing perceived loopholes that allow developers to skirt US AML rules. Wyden noted that BRCA provides adequate safeguards to prevent misuse by bad actors.

🚨NEW: Senator @RonWyden (D-OR) is asking Senate leaders to preserve the Blockchain Regulatory Certainty Act, as passed by the Senate Banking Committee, in any version of the Clarity Act brought to the floor.

It comes amid uncertainty over whether certain key law enforcement… pic.twitter.com/ABLSJ1KlJm

— Eleanor Terrett (@EleanorTerrett) July 8, 2026

“Developers who make and release software that allows people to manage their own digital assets and, critically, where the developer does not control user assets – should not be treated as money transmitters solely because they create or publish software,” wrote Wyden.

Meanwhile, the CLARITY Act has received support from a coalition of over 200 digital asset service providers, which is urging the Senate leadership to schedule a floor vote on the bill. Last week, the bill garnered backing from the National Organization of Black Law Enforcement Executives (NOBLE).

Despite additional support from the White House, the odds for the CLARITY Act passing into law before 2027 have tanked. Furthermore, Galaxy Digital cut its approval odds in 2026 to 50% while prediction marketplaces Polymarket and Kalshi peg the chances of passage into law before 2027 at under 50%.

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