NY AG Warns Proposed Crypto Bill Could Weaken State Enforcement

New York Attorney General Letitia James has expressed concerns that the proposed Digital Asset Market Clarity Act (CLARITY Act) could weaken state regulators' ability to enforce crypto laws. In a written testimony submitted to the Senate Permanent Subcommittee on Investigations, James warned that the federal legislation would override state regulation of digital asset markets and shift oversight to the Commodity Futures Trading Commission.

James pointed out that complaints about crypto scams received by her office have tripled over the past three years, with reported losses totaling nearly $500 million over five years. She argued that this highlights the need for stronger consumer protections on digital asset platforms.

The attorney general called for crypto platforms to comply with anti-money laundering, know-your-customer, and cybersecurity requirements, as well as conduct surveillance for suspicious activity and market manipulation. James also urged Congress to make platforms and intermediaries financially liable when they fail to protect customers from fraud.