The updated CLARITY Act would expand the ways state, local, and Tribal law-enforcement agencies could use certain federal grants to investigate financial fraud. It would also make digital-asset investigations, related technology, and technical assistance eligible for dedicated Byrne Justice Assistance Grant funding.
The July 22 text analyzed in this article remains proposed legislation. The Senate did not pass H.R. 3633 before its August state work period. A cloture motion on whether to advance to consideration is scheduled to ripen on September 15, 2026, but that is a procedural step, not final passage, and the provisions discussed below could still change.
Those provisions matter because cryptocurrency investigations are no longer confined to federal cyber units or specialized national task forces. A local agency may encounter digital assets in an elder-fraud complaint, an investment scam, a ransomware case, narcotics trafficking, sanctions evasion, terrorism financing, or the movement of proceeds from an otherwise traditional crime.
The investigative challenge is not simply acquiring a blockchain analytics tool. Agencies need trained personnel, appropriate technology, reliable data, referral paths, financial-sector contacts, and ways to determine whether another organization is already working on related activity.
Sections 10901, 10902, and 10903 address different parts of that capacity problem. This article stays at the agency-readiness level: funding flexibility, staffing, tools, and implementation. Article 3 covers the federal training program in detail, while Article 6 applies Section 10901 to pig-butchering and elder-fraud cases.
Short answer: The updated CLARITY Act would allow specified existing federal grants to support investigations of elder financial fraud, pig butchering, and general financial fraud. It would also expand eligible Byrne JAG activities to include digital-asset investigations, prosecution, analytics tools, related technology, certification, training, and technical assistance. A separate provision would create a federal digital-asset training program for personnel across levels of government.
Why state and local crypto-investigation capacity matters
Many digital-asset crimes first appear as local victim reports.
A resident may tell a police department that an online romantic partner persuaded them to move money into a fraudulent cryptocurrency investment. An older adult may report that an impersonator instructed them to use a digital-asset kiosk. A business may discover that stolen funds were converted into cryptocurrency. A narcotics case may reveal payments moving through self-hosted wallets and exchanges.
The blockchain may be global, but the first investigative responsibility often sits with an agency serving a particular community.
That creates a difficult mismatch. The investigator may have a victim, a transaction record, and a wallet address, but lack one or more of the following:
- Personnel with time and experience to handle a complex financial investigation
- Software to examine blockchain activity
- Training on digital assets, legal process, and referrals
- A verified contact at the relevant financial institution or exchange
- Awareness of related investigations in other jurisdictions
- A process for sharing useful intelligence securely
- Resources to preserve evidence and move before funds disperse
The updated CLARITY Act does not solve every part of this problem. It does, however, recognize that state and local readiness requires more than a federal investigative backstop.
What would Section 10901 do?
Section 10901 is titled “Guarding Unprotected Aging Retirees from Deception” and may be cited as the GUARD Act.
Its most immediate effect for law enforcement would be to authorize state, local, and Tribal agencies and other grantees receiving specified federal grant funds to use those funds for investigations of:
- Elder financial fraud
- Pig butchering
- General financial fraud
The provision defines pig butchering as a confidence and investment fraud in which a victim is gradually induced to make increasing contributions, generally in cryptocurrency, to an apparently legitimate investment before the scammer disappears with the money.
That definition connects digital assets to a broader fraud problem. The investigative subject is not cryptocurrency in isolation. It is a social-engineering scheme that may use bank accounts, payment applications, digital-asset services, self-hosted wallets, fake trading interfaces, and overseas criminal infrastructure.
Section 10901 would permit more than software purchases
The proposed uses of eligible grant funds are operationally broad.
Agencies and grantees could use qualifying funds to:
- Hire and retain analysts, agents, experts, and other personnel
- Provide training for complex financial investigations
- Train personnel on coordination among federal, state, local, and Tribal agencies
- Train personnel to assist fraud and exploitation victims
- Train personnel to use blockchain intelligence tools and address emerging technologies
- Obtain software and technical tools for fraud and exploitation investigations
- Improve data collection and reporting
- Conduct training and tabletop exercises involving financial institutions and law enforcement
- Designate a financial-sector liaison to exchange information relevant to fraud and scam investigations
This list is important because it treats capacity as a system.
Software without trained users may sit underused. Training without staff time may not change case outcomes. A capable investigator without a reliable financial-sector contact may lose time identifying where to direct a request. An agency that cannot see related cases may investigate one victim without recognizing a larger network.
Section 10901 would allow eligible funds to support several of these dependencies together.
Financial institutions are part of the proposed local response
Two elements of Section 10901 directly involve financial institutions.
First, qualifying funds could support training and tabletop exercises designed to improve coordination and communication among financial institutions and federal, state, local, and Tribal law enforcement.
Second, an agency could designate a financial-sector liaison to serve as a point of contact for sharing and exchanging information relevant to fraud and scam investigations.
These are not incidental details.
Banks, credit unions, fintechs, exchanges, money services businesses, and other financial organizations may each hold a different part of the picture. One institution may see the victim’s fiat transfer. Another may have account-identification information. An exchange may observe the conversion or withdrawal. Law enforcement may hold the victim statement, linked complaints, or evidence from another case.
Coordination helps those fragments become investigative context. It also requires appropriate legal authority, access controls, verified participants, documentation, and rules governing how information may be used.
What would Section 10902 do?
Section 10902 would amend eligible program categories under the Byrne Justice Assistance Grant program.
The proposed categories would include programs for investigating and prosecuting crimes involving:
- Digital assets
- Distributed-ledger systems
- Evasion of United States sanctions laws
- Fraud
- Terrorism financing
- Other illicit-finance activity
The section would also add programs to acquire distributed-ledger analytics tools and related investigative technology, certify the use of those tools and technologies, and provide technology-focused training and technical assistance.
Section 10902 therefore does more than add “crypto” to a general grant description. It identifies investigation, prosecution, technology acquisition, technology-use certification, and technical assistance as related capability needs.
How much funding would Section 10902 authorize?
The proposal would authorize $600 million for each of fiscal years 2027 through 2031 for grants covering the newly added program categories. That equals $3 billion over five fiscal years.
The wording must be handled precisely.
An authorization of appropriations is not the same as an appropriation. Section 10902 would authorize Congress to provide those amounts. It does not mean that $3 billion has already been approved, awarded, obligated, or spent.
The current text also says the funds would remain available until expended. The Attorney General would consult with the Treasury Secretary when making grants from amounts appropriated under the section for the specified programs.
If enacted and funded, the provision could materially expand the resources available for state and local digital-asset enforcement. Actual implementation would still depend on the legislative process, subsequent appropriations, grant guidance, eligibility rules, applications, awards, and agency procurement decisions.
How Sections 10901 and 10902 differ
The two sections are related, but they should not be described as one grant program.
| Provision | Primary function | Practical significance |
| Section 10901 | Expands permissible uses of specified existing federal grant funds for elder fraud, pig butchering, and general financial-fraud investigations | Gives eligible grantees flexibility to support personnel, training, tools, data, tabletop exercises, victim assistance, and financial-sector liaison roles |
| Section 10902 | Expands Byrne JAG program categories and authorizes funding for digital-asset enforcement capabilities | Supports investigation and prosecution, analytics and related technology, technology-use certification, training, and technical assistance |
| Section 10903 | Directs Treasury and DOJ to create a government digital-asset training program within 180 days after enactment | Builds knowledge about investigative tools, agency roles, referrals, information sharing, customer protection, coordination, and national-security risks |
Together, the provisions point toward a broader model of readiness:
- People: Agencies need investigators, analysts, prosecutors, experts, and liaisons.
- Tools: Personnel need appropriate analytics and investigative technology.
- Knowledge: Users need technical, legal, procedural, and coordination training.
- Relationships: Agencies and financial institutions need reliable points of contact.
- Context: Participants need to connect wallet activity to victims, entities, cases, and related investigations.
- Accountability: Grant use, information exchange, and investigative actions need documentation and oversight.
Funding one layer while neglecting the others can leave the underlying capability gap intact.
Where Deconflict fits
The updated CLARITY Act repeatedly returns to information sharing, coordination, training, and investigative capacity.
Deconflict operates within that problem space by helping law enforcement and financial institutions connect verified investigative context across organizational boundaries.
For law enforcement, access to the Deconflict platform is free. Deconflict also provides practical crypto-investigation training that agencies can use while the legislative process continues.
For financial institutions, Deconflict provides institutional capabilities designed to support Verified Intelligence and coordination with authorized partners.
That does not make Deconflict a federal grant program, a federally approved analytics product, or a substitute for the programs proposed in Sections 10901 through 10903. The current legislation does not name or endorse Deconflict.
The connection is operational: agencies can acquire more people, technology, and training, but investigations still need a way to connect reliable context and identify overlap across organizations. Deconfliction helps make those investments more useful.
