Law enforcement officials warn CLARITY Act could compromise national security

Thomas Loving, Executive Director of the Kentucky Narcotics Officers' Association, has called on Congress to reject the CLARITY Act in its current form, arguing that it contains exemptions for the cryptocurrency industry that could undermine national security.

Loving warns that without strict Know Your Customer (KYC) and Anti-Money Laundering (AML) standards, hostile regimes could exploit digital assets. He cites North Korea's theft of over $2 billion in crypto assets in 2025 to fund weapons programs and Iran's use of cryptocurrency to evade sanctions and fund terrorist proxies.

The report notes that the U.S. Treasury Department sanctioned Nobitex, Iran’s largest digital asset exchange, for facilitating payments tied to the Islamic Revolutionary Guard Corps. Additionally, Iranian actors are reportedly demanding cryptocurrency payments for tolls from commercial vessels in the Strait of Hormuz.