James Warns CLARITY Act Weaks State Powers to Prosecute Crypto Fraud
New York Attorney General Letitia James has expressed concerns about the CLARITY Act, warning that it could weaken state powers to prosecute fraud and enforce investor protection laws in the crypto market. In written testimony submitted to a Senate committee, James argued that the bill would interfere with state investor protection laws and reduce the authority of state and local agencies to investigate misconduct involving digital assets.
According to figures included in her testimony, state and local law enforcement agencies are responsible for about 98.8% of arrests, compared to roughly 1.2% by federal agencies. James emphasized that 'this is a mistake' and that the bill would 'neuter state and local law enforcement.' She has asked Congress to add stronger investor protection, anti-money-laundering, and ethics safeguards to the legislation.
The CLARITY Act aims to establish a broader federal market structure for digital assets and divide oversight responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Senate Banking Committee advanced the legislation 15-9 in May, but Democratic support at the committee stage does not guarantee enough votes on the floor.