James Opposes CLARITY Act, Citing Threats to State Authority Over Crypto Enforcement

New York Attorney General Letitia James has expressed her opposition to the CLARITY Act, a proposed crypto market structure legislation. In written testimony submitted to a Senate committee, she argued that the bill would weaken state authority to combat cryptocurrency fraud.

James claimed that the CLARITY Act would override state investor protection laws and reduce the ability of state attorneys general and local prosecutors to pursue fraudulent activity in the digital asset industry. She emphasized that limiting state enforcement would be a serious mistake, especially given the crucial role local authorities play in policing financial crimes.

According to James' testimony, state and local law enforcement agencies handle the overwhelming majority of criminal enforcement across the United States, accounting for roughly 98.8% of arrests, while federal authorities are responsible for only about 1.2%. She contended that the legislation would prevent states from fully prosecuting cryptocurrency-related fraud and other legal violations, leaving enforcement largely in federal hands.