State Attorneys General Pressure the Clarity Act in the US
18 state attorneys general fear the law would limit their power to prosecute crypto fraud. The debate also touches on the role of the SEC and CFTC in US oversight.
Key Takeaways
- Eighteen US state attorneys general want the Senate to amend the Digital Asset Market Clarity Act.
- They fear the law would limit states in dealing with crypto scams and fraud under existing rules.
- Other groups are also criticizing the proposal, while the debate over oversight between the SEC and CFTC continues.
A bipartisan group of 18 US state attorneys general has called on the Senate to amend the Digital Asset Market Clarity Act. According to the letter, the law could limit states' ability to tackle crypto-related scams and fraud cases under existing securities and commodities rules.
Objection to Federal Preemption
The letter was signed by top legal officials from New York, Arizona, Connecticut, California, Kansas, and Ohio, plus the District of Columbia. The group says recent versions of the Clarity Act are too vague about when federal rules override state authority. That could let defendants try to block state enforcement.
The state attorneys general wrote that they want to preserve states' authority to protect the public from scammers. They pointed to the FBI, which said that $11.4 billion (€9.9 billion) was stolen from investors through crypto last year. The letter also says the law, in its current form, could give the SEC room to override state authority through the definition of a so-called qualified transaction.
Broad Resistance in Washington
The criticism is not coming from state attorneys general alone. Other groups have also spoken out against the latest version of the bill, including the Indian Gaming Association. That organization fears the expansion of CFTC powers goes too far and that state and tribal gambling laws are not being protected enough.
Senator Cynthia Lummis, one of the bill's main sponsors, said she spoke with the IGA in June and did not hear any objections to the text at the time. At the same time, there is still debate over other parts of the proposal, including the rules around stablecoin yield and rewards. Christopher Williston of the Independent Bankers Association of Texas called the revised text on that point a “joke” and “a meaningless nothing provision” on Monday.
Why This Matters for Crypto
The Clarity Act is meant to bring more clarity to how oversight is split between the SEC and the CFTC. That makes the political fight over the law important for the broader crypto market, especially since enforcement against fraud and online scams remains a sensitive issue for many US and European players. For European readers, this shows how tightly regulation, consumer protection, and market access are still tied together in the US. The political battle over the law is continuing, while the Senate prepares for another vote on the market structure bill.
That tension is also visible in the broader debate over the law, where the ethics fight in the Senate already caused delays earlier.
