New York Attorney General Letitia James has led 17 bipartisan attorneys general against the Clarity Act. The group urged senators to reject the cryptocurrency bill before Tuesday’s procedural vote.
The attorneys general argue that the legislation could weaken states’ ability to investigate fraud. They also warn that unclear federal rules could limit state enforcement powers.
Moreover, James says the bill could create new opportunities for crypto scammers. Consequently, state officials fear weaker oversight could leave investors with fewer protections.
Senate Bill Faces New Scrutiny
The Senate Republicans released a revised version of the 600-page legislation Sunday. The changes seek to address several concerns raised by Democrats during negotiations.
Significantly, the latest draft gives state attorneys general enforcement powers over conflict-of-interest rules for public officials. The change targets concerns surrounding cryptocurrency interests linked to President Donald Trump.
Additionally, the bill gives the Treasury secretary an 18-month circuit breaker for certain stablecoin rewards. The provision could respond to major deposit outflows from community banks.
Besides those changes, lawmakers revised rules affecting blockchain developers and affiliate trading. The legislation also clarifies how states can apply consumer protection laws.
However, James argues that the SEC could still override state registration authority. Hence, the dispute now centers on federal oversight and states’ traditional enforcement role.
Related: Lummis Says Trump Accepts Ethics Curbs to Help Seal CLARITY Act Deal
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