Cynthia Lummis

Sen. Cynthia Lummis (R-Wyo.) said on Sunday that the Clarity Act would close financial regulatory gaps that allowed North Korea’s Lazarus Group and other bad actors to steal cryptocurrencies.

Legislation to Counter North Korean Hackers?

Lummis said in an X post that such North Korean entities “thrive on gaps” in the current cryptocurrency financial system.

“The Clarity Act gives Treasury new sanctions authority and a safe harbor for companies to freeze suspicious transactions before the money moves,” the senior Republican stated.

Lummis had previously pointed to a provision in the bill’s text that empowers the Treasury to monitor, limit, or outright prohibit digital-asset transactions connected to foreign jurisdictions if they present a money-laundering concern.

North Korea’s Threat to Cryptocurrency

The U.S. government claims that the illegal proceeds from the thefts are used to fund North Korea’s weapons and missile program.

The Counter Arguments

Critics, to the contrary, argue that the Clarity Act could be a “ticket to sanctions evasion.”

Richard Nephew, former Director for Iranian affairs at the National Security Council, argued that the bill creates "significant loopholes" in anti-money laundering and counter-terrorism financing rules for decentralized finance and certain cryptocurrency firms, leaving them "vulnerable" to sanctions evaders and fraudsters.

He said that countries, including Iran and North Korea, could exploit these weaknesses and use cryptocurrencies for illicit transfers.

Sen. Elizabeth Warren (D-Mass.) also expressed concerns over the legislation, arguing that it fails to prevent the misuse of cryptocurrencies by America’s adversaries, especially Iran.

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