Cathie Wood Calls CLARITY Act's Section 604 'Thoughtful And Nuanced' Amid Law Enforcement Pushback

• Cathie Wood amplified Ark analyst Raye Hadi's argument that KYC and AML obligations should apply at custodial on- and off-ramps, not software interfaces.
• The provision would prevent non-custodial developers and certain DeFi infrastructure providers from automatically being treated as money transmitters.
• Her endorsement comes as law enforcement and anti-trafficking groups lobby against the provision ahead of a targeted July 17 Senate vote on the CLARITY Act.

Cathie Wood on Saturday threw her support behind a contested provision of the CLARITY Act, backing a defense of the measure written by one of her own analysts even as law enforcement groups pressed Washington to reconsider it.

The Ark Invest founder and CIO called Section 604 of the bill "thoughtful and nuanced". Section 604, also known as the Blockchain Regulatory Certainty Act (BRCA), would shield non-controlling developers, open-source contributors, self-custody tools, and certain decentralized finance (DeFi) infrastructure from automatically being treated as money transmitters.

Wood has long been one of the most prominent bulls on both companies, maintaining famously aggressive price targets on Tesla (TSLA) through its volatility while repeatedly praising SpaceX (SPCX) as a top private holding in her funds.

She amplified a detailed argument from Raye Hadi, a research associate on Ark's digital assets team, and said the provision would help digital-asset innovation flourish in the US "instead of pushing it abroad."

He argued that non-custodial software developers should not be classed as money transmitters and that anti-money-laundering and know-your-customer (KYC) obligations belong at custodial on- and off-ramps rather than at the software interfaces users interact with. 

Forcing developers to collect data, he said, would push services and users offshore while adding little to the visibility law enforcement already has into public blockchains, where transactions are broadly traceable.

Critics Warn Of Enforcement Gaps

The endorsement came days after a coalition of major law enforcement organizations and a separate group of Catholic and anti-trafficking advocates urged officials to oppose the provision, citing oversight gaps and illicit-finance concerns. 

The four law enforcement groups raised their objections in a letter to Acting Attorney General Todd Blanche and White House crypto adviser Patrick Witt, though the opposition was not unanimous, with two major police organizations declining to sign.

Supporters counter that writing code should not, by itself, trigger money-transmitter obligations, a position Sen. Cynthia Lummis (R-Wyo.) has reiterated in defending the provision.

Ark's Broader CLARITY Act Bet

Wood's intervention is consistent with her broader stance on the legislation. The Ark founder has been a steady supporter of the CLARITY Act, framing it as a chance for the digital-asset sector to flourish, and her firm has repeatedly bought crypto-related stocks during CLARITY-driven volatility, including a sizable purchase of Circle (CRCL) and Coinbase Inc (COIN) among others. 

CRCL stock closed up over 6% on Friday. On Stocktwits, the retail sentiment around CRCL remained in the ‘bearish’ zone, as chatter around it stayed in the ‘high’ levels over the past day.

Similarly, COIN stock closed up over 4% on Friday. On Stocktwits, the retail sentiment around COIN also remained in the ‘bearish’ zone, as chatter around it stayed in the ‘high’ levels over the past day.

Senate Negotiations Continue

The dispute over Section 604 added another point of contention to Senate negotiations over the CLARITY Act, alongside the ethics roadblock tied to President Trump's family's crypto businesses, that lawmakers must resolve before the bill can reach the president's desk. Republicans are targeting a Senate floor vote on July 17, after lawmakers return from the July 4 recess.

The legislative control has played out against a broadly constructive backdrop for crypto among institutional voices. VanEck's head of digital assets research, Matthew Sigel, said amid optimism over CLARITY Act progress that Bitcoin (BTC) was likely to retest its record high of about $126,000 within a year, citing sustained investor demand and growing institutional adoption, which he called "a sea change" for the asset's role in global markets.

Read also: Cathie Wood's Ark Invest Resumes Buying Crypto Stocks After A Week-Long Pause

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