US Senator Lummis: The CLARITY Act should be passed to grant stablecoin issuers legal protection to freeze funds involved in illegal activities.

U.S. Senator Cynthia Lummis has stated that the recent lawsuit against Tether over its freezing of $42.4 million in USDT underscores regulatory gaps in the crypto industry’s efforts to combat illicit financial activities. She noted that stablecoin issuers and trading platforms currently face the risk of civil lawsuits if they freeze assets suspected of being tied to illegal activity. Lummis explained that Section 305 of the Clear Digital Asset Market Structure Act would grant stablecoin issuers and trading platforms the necessary authority to promptly freeze stablecoins suspected of involvement in illicit activities, while protecting them from resulting civil liability. She argued that this provision would help the crypto industry more effectively stop illicit fund flows and resolve the legal risks that issuers and platforms currently encounter when implementing compliance measures.