New York AG Warns CLARITY Act Would Limit State Crackdown on Crypto Fraud

New York Attorney General Letitia James has expressed opposition to the CLARITY Act, citing concerns that it would limit state's ability to crack down on crypto fraud. In a written testimony to a Senate committee, she stated that the bill interferes with and preempts states' investor protection laws.

James emphasized that state and local law enforcement agencies are responsible for most of the law enforcement work in the country, accounting for around 98.8% of arrests. She argued that the CLARITY Act would 'neuter state and local law enforcement by preempting states and preventing them from fully prosecuting rampant fraud and violations of law by actors in the cryptocurrency marketplace.'

Democratic senators have also raised concerns about the bill, suggesting that the Department of Justice cannot be the sole enforcer of the ethics provision. They are pushing for state prosecutors to also have the power to enforce the rule.