The CLARITY Act aims to equip U.S. regulators and crypto firms with stronger tools to combat North Korea’s notorious Lazarus Group, according to Senator Cynthia Lummis. This legislation could expand Treasury’s sanction powers and offer legal protection to companies pausing suspicious crypto transactions.
New Financial Rules to Close Loopholes Exploited by Hackers
Lummis highlighted on social media that Lazarus and similar illicit groups exploit weaknesses in current financial regulations. The CLARITY Act, featured in the Senate’s version of H.R. 3633, would bring registered digital asset brokers, dealers, and exchanges under the Bank Secrecy Act’s anti-money laundering framework. These entities would have to implement rigorous monitoring of suspicious activities and report certain transactions.
Beyond brokers, provisions focus on digital asset kiosks and certain non-DeFi trading platforms, though they would not encompass all DeFi interfaces or crypto ATMs. Treasury would gain authority to impose targeted restrictions on digital asset flows linked to money laundering from foreign adversaries including, but not limited to, North Korea and Iran.
Temporary Holds and Legal Shields for Crypto Firms
One notable feature allows financial institutions to temporarily freeze digital asset transfers for up to 30 days if they suspect illegal activity, with the possibility of extending the hold by an additional 150 days upon agency request. Firms following these protocols in good faith would be shielded from federal and state lawsuits, providing a safe harbor that currently does not exist under existing law.
This measure intends to give companies a practical way to intervene before illicit funds move, without forcing mandatory freezes when no legal obligation exists. The Senate is racing against time as the August 7 recess approaches and Polymarket data shows the bill’s chance of passage dropped from 82% in February to 38% by late July.
Lazarus Group’s Impact Fuels Security Concerns
North Korea’s Lazarus Group has caused some of the most significant crypto thefts in recent years. The FBI linked them to the 2022 Ronin Bridge hack, which drained approximately $620 million in ether connected to the Axie Infinity game. In early 2025, the Treasury and FBI attributed a $1.5 billion theft from Bybit to North Korean-linked actors.
These attacks have intensified calls for stricter oversight and new legal tools. The CLARITY Act’s proposed measures could reshape how digital asset platforms manage risk and coordinate with regulators to prevent such breaches.
