New York Attorney General Letitia James is leading a bipartisan group of 18 state attorneys general in urging the U.S. Senate to reject the CLARITY Act, warning that the landmark digital asset market-structure bill would weaken state-level fraud enforcement and investor protections.
In a letter sent Monday to Senate Banking Committee Chairman Tim Scott and ranking Democrat Elizabeth Warren, the attorneys general said the legislation would “muddy the waters” and restrict their authority to investigate cryptocurrency scams and hold firms accountable. “As written, the Clarity Act would embolden scammers and potentially strip attorneys general of our authority to protect our states’ investors and their wallets,” James said in a statement.
The letter landed one day before the full Senate was scheduled to take a key procedural cloture vote on the more than 600-page bill. Senate Republicans released a revised version Sunday night with 126 substantive changes sought by Democrats, aiming to secure the 60 votes needed to overcome a filibuster. Republicans control 53 seats, so at least seven Democratic or independent votes are needed if all Republicans support the measure.
Among the revisions, state attorneys general would receive a role in enforcing conflict-of-interest rules for public officials. That issue became a sticking point because of President Donald Trump’s crypto holdings, including hundreds of millions of dollars linked to World Liberty Financial and his TRUMP memecoin. The latest draft also gives the Treasury secretary authority to impose an 18-month “circuit breaker” on stablecoin rewards if payment stablecoins trigger substantial deposit outflows from community banks.
The bill also narrows money-transmission registration requirements for certain software developers under the Blockchain Regulatory Certainty Act, adds a civil safe harbor, imposes Agriculture Committee guardrails on affiliate trading and conflicts of interest, and clarifies when state consumer protection laws apply.
James and the other attorneys general argue the bill would still allow the Securities and Exchange Commission to preempt state registration authorities and could upend the state securities regulatory regime. They are calling for clearer protections for state consumer laws and greater division of federal and state enforcement duties before the legislation advances.
The Senate cloture vote was expected around 2:15 p.m. ET Tuesday. The outcome could determine whether negotiations continue or the bill faces further delay, with significant implications for the future of U.S. digital asset regulation.
