New York Attorney General Letitia James led a bipartisan coalition of 17 other state attorneys general on September 14 in opposing the Digital Asset Market Clarity Act, warning that the bill would strip states of their ability to police cryptocurrency fraud. In a letter to Senators Tim Scott and Elizabeth Warren, the chair and ranking member of the Senate Banking Committee, the coalition argued that the measure would hand the Securities and Exchange Commission sweeping power to preempt state registration authorities.
The Preemption Concern
The attorneys general warned that the Clarity Act, as written, would prevent states from serving as the first line of defense against what they called an escalating epidemic of cryptocurrency fraud. The letter says the bill’s grant of authority to the SEC would not apply only to digital assets, but would broadly let the agency reset the scope of federal preemption and potentially upend the state securities regulatory regime. “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. “Together with my attorney general colleagues, I urge Congress not to pass the Clarity Act.”
Fraud Losses Cited as the Stakes
The coalition backed its warning with a series of data points. The FBI reported $11.4 billion in losses from cryptocurrency-related complaints in 2025, up 22 percent from the prior year, with an average reported loss of $62,604. The Federal Trade Commission tallied $1.78 billion in crypto-related losses in 2025, a 25.6 percent increase. New York’s office said complaints about crypto scams have tripled over the past three years, with nearly half a billion dollars in losses reported over five years. The concern over a regulatory vacuum comes as federal regulators such as the CFTC prepare fallback rules in case the legislation stalls.
Senate Vote Looms
The opposition adds to a shifting coalition around the bill ahead of an expected Senate vote. It follows the National Sheriffs’ Association dropping its own opposition to the measure earlier this month. James’s office, which in 2019 brought the first enforcement action against stablecoin issuer Tether and has secured billions of dollars in refunds and fines from firms including Gemini, Genesis and KuCoin, argued that state enforcement powers have been a critical weapon in fighting the crypto fraud epidemic and should not be ceded to Washington.
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