Attorneys General Warn Federal Crypto Bill Could Weaken State Fraud Protections

Eighteen US attorneys general have written to Congress expressing concerns about the Digital Asset Market Clarity Act (CLARITY Act), citing potential weaknesses in state fraud protections.

The letter, signed by New York Attorney General Letitia James and 17 other attorneys general, argues that the federal bill could give the Securities and Exchange Commission significant new power to preempt state securities registration requirements.

This would embolden scammers and potentially strip attorneys general of their authority to protect investors and their wallets, AG James said. States have brought more than 330 anti-fraud enforcement actions involving cryptocurrency since 2017, and the coalition wants Congress to preserve state enforcement authority for both tokenized and non-tokenized securities.

The dispute comes as cryptocurrency-related fraud remains a major financial threat. Americans reported over $20 billion in total internet-crime losses in 2025, with cryptocurrency investment fraud alone producing more than $7.2 billion in reported losses, according to the FBI.