CLARITY Act Clears Committee, But Money Laundering Question Hovers Over Crypto

The Senate Banking Committee voted 15-9 on Thursday to move forward on the CLARITY Act, a crypto market structure proposal that has been the subject of debate for a while now.

Nevertheless, just ahead of the vote, the Bank Policy Institute (BPI) put out a series of tweets on X about illicit crypto flows hitting $154 billion in 2025, adding another dimension to what was already an intensely debated topic on the extent of regulation in digital assets.

Bank Advocates Lean on Crime Data

The timing of BPI’s thread drew attention because lawmakers were simultaneously debating amendments tied to stablecoin yield restrictions and enforcement standards inside the CLARITY Act markup session.

According to data from Chainalysis that the institute shared, in 2025, illicit crypto addresses received $154 billion. This was a 162% year-over-year increase, driven largely by a 694% jump in value received by sanctioned entities.

Furthermore, the on-chain money laundering ecosystem grew from $10 billion in 2020 to over $82 billion in 2025, with stablecoins, primarily Tether (USDT), now accounting for 84% of all illicit transaction volume, displacing Bitcoin as the preferred payment method for criminals.

In a separate piece, the BPI argued that banks have spent decades staffing tens of thousands of AML employees while crypto companies have been largely exempt.

It said that the GENIUS Act imposed some obligations on US stablecoin issuers, but did not cover foreign issuers operating stateside. Tether, incorporated in El Salvador, sits outside that net.

The piece also cited the Islamic Revolutionary Guard Corps, whose crypto activity reportedly reached over $3 billion in 2025, representing roughly 50% of Iran’s total crypto ecosystem by Q4 of that year.

According to the BPI, unhosted wallets, cross-chain bridges, and mixers are “specifically designed to frustrate tracing and openly advertised as such.”

The stablecoin debate has become one of the most contentious parts of the CLARITY Act negotiations, with banking groups, including members of the American Bankers Association, spending weeks lobbying senators to tighten language restricting yield-bearing stablecoins.

As reported earlier this week, banking groups Senate offices more than 8,000 letters ahead of the markup vote, while the crypto advocacy group Stand With Crypto said its supporters had contacted lawmakers nearly 1.5 million times in support of the bill.