State Attorneys General Threaten to Sink CLARITY Act Over Crypto Enforcement Powers
The CLARITY Act is facing fresh pressure from a bipartisan group of state attorneys general ahead of its key Senate cloture vote. In a letter to Senate Banking Committee leaders, 18 attorneys general from various states and the District of Columbia expressed concerns that the bill could weaken their ability to pursue crypto scams and protect investors.
The coalition pointed out that states have brought more than 330 anti-fraud enforcement actions against crypto scammers since 2017. They warned that ambiguities in the current CLARITY draft could give bad actors opportunities to challenge or delay state enforcement actions.
The attorneys general argued that their states' powers to police the market and protect investors remain essential tools for investigations, examinations, and investor protection. They called for narrowly tailored exemptions to preserve state authority and removal of provisions they said could give the Securities and Exchange Commission (SEC) indirect preemption authority through a 'qualified transaction' provision.
The opposition comes as Senate Republicans released another version of the bill on Sunday night, which included concessions to Democrats on government ethics and other provisions. However, uncertainty remains over whether enough Democratic support can be secured to clear the Senate's 60-vote threshold.