Author
Ahmed Barakat
Author
Share
Senator Cynthia Lummis has put national security at the center of her push for the Digital Asset Market Clarity Act, arguing the bill’s three core illicit-finance provisions are the most direct mechanism available to cut off North Korea’s Lazarus Group from crypto markets.
The argument lands as the bill’s Senate floor vote slips toward the August recess, and Polymarket traders price 2026 passage at just 33–37%, down from above 80% in February.
Discover: The Best Crypto to Diversify Your Portfolio
Clarity ACT: Three Provisions, One Target
Lummis has pointed to three specific sections of H.R. 3633 to make her case. Section 201 extends the Bank Secrecy Act and AML crypto compliance obligations to crypto firms, exchanges, DeFi front ends, and crypto ATMs, including. Section 303 adds a new Treasury crypto sanctions authority aimed at Iran.
Section 305 creates a safe harbor that allows exchanges to voluntarily freeze funds tied to suspicious activity before obtaining a court order, provided they cooperate with law enforcement.
That last provision is the operational crux of Lummis’s argument. Lazarus moves stolen funds quickly across chains and through mixers, and the current legal framework gives exchanges little incentive to act unilaterally. Section 305 closes that window by removing liability for platforms that freeze fast-moving suspicious transactions.
On July 26, Lummis posted that North Korea’s Lazarus Group and other bad actors thrive on gaps in financial rules, and that the CLARITY Act gives Treasury new sanctions authority alongside a safe harbor for companies to freeze suspicious transactions before the money moves, a paraphrase of her public statement on X.
Discover: The Best Token Presales
Lazarus’s Track Record Makes the Case
The scale of the problem is not abstract. Lazarus Group stole roughly $625 million from the Ronin Bridge in 2022, the infrastructure underpinning Axie Infinity.
In February 2025, it executed the largest single crypto heist on record, taking $1.5 billion from Bybit. Treasury estimates the group has taken at least $3.4 billion in crypto since 2007, with proceeds routed toward North Korea’s weapons programs.
The Axie Infinity main menu screen features a player’s team of three Axies.
The group has also deployed operatives posing as remote IT workers to directly infiltrate crypto firms, a vector that AML and KYC controls at the corporate level are specifically designed to catch. Lummis frames Section 201’s extension of BSA obligations as a direct response to exactly this kind of insider-access attack surface.
Senator Elizabeth Warren has pushed back hard, calling the Digital Asset Market Clarity Act a sanctions loophole rather than a sanctions tool. A former NSC Iran director. Those are not frivolous objections. Republicans have already absorbed additional ethics language into a merged draft released July 22.
Don’t Miss Out on Our $1,000 USDT Airdrop on ByBit
