James Sounds Alarm on CLARITY Act, Citing Risks of Crypto Scam Oversight Shift

New York Attorney General Letitia James is sounding the alarm on the Digital Asset Market Clarity Act (CLARITY Act), which she says would limit state and local law enforcement's ability to address crypto scams.

The CLARITY Act, currently moving through the Senate, aims to shift oversight of digital assets from state regulation to the Commodity Futures Trading Commission (CFTC). James testified before the Senate Homeland Security and Governmental Affairs Committee that this shift would hinder her office's ability to pursue enforcement actions against crypto platforms.

James emphasized the need for increased federal oversight of cryptocurrency, citing a tripling of scam complaints in the past three years. She proposed a six-point framework to address these concerns, including mandating compliance with anti-money laundering and cybersecurity rules, banning untraceable crypto conversions, and holding platforms accountable for fraud.

The CLARITY Act has gained momentum in the Senate, with Majority Leader John Thune planning to push for a procedural vote this week. The legislation's passage could provide more clarity on digital assets and stablecoins, potentially benefiting companies like Coinbase (COIN) and Circle (CRCL).