State Attorneys General Push Senate to Reject Clarity Act

A bipartisan group of 18 state attorneys general, including officials from the District of Columbia, sent a letter to the U.S. Senate on Monday urging lawmakers to vote against the Digital Asset Market Clarity Act. The officials said the bill could restrict states’ ability to bring securities and commodities cases against crypto scammers.

Attorneys General Warn of Lost Enforcement Power

The letter argued that the Clarity Act, as currently drafted, could interfere with states’ existing authority to police crypto-related fraud.

“We write to urge the Senate to expressly preserve the police powers of the states and ensure that the states remain armed with the tools necessary to protect the American people from predatory scammers. As the epidemic of online scams continues to grow, we remain firmly opposed to any federal statutory changes that would displace states’ authority to oversee the securities and commodities markets to protect everyday Americans.”

The letter cited FBI data showing that $11.4 billion was stolen from investors last year through crypto-related schemes.

Signers of the letter included the top prosecutors from New York, Arizona, Connecticut, California, Kansas, Ohio and a dozen other states, spanning both major political parties. 

New York Attorney General Letitia James and California Attorney General Rob Bonta signed alongside Republican officials including Kansas Attorney General Kris Kobach and Ohio Attorney General Andy Wilson.

Where the Bill’s Language Falls Short, Signers Say

The letter said recent drafts of the Clarity Act include language intended to reserve certain fraud-prosecution powers for states, but that the wording is ambiguous enough that defendants could use it to block state enforcement actions. 

The signers also said the bill’s “qualified transaction” definition would let the U.S. Securities and Exchange Commission preempt state authority in ways they consider too broad.

The letter calls for the Senate to reject the bill without amendments addressing these concerns, rather than requesting specific rewritten language.

Other Groups Raise Separate Objections

The Indian Gaming Association has also come out against the current draft, citing concerns about the scope of new authority the bill would grant the Commodity Futures Trading Commission.

“Until text is added to expressly provide that state, tribal gaming laws, and the Indian Gaming Regulatory Act are not preempted by federal commodities law, and that designated contract markets are not permitted to list contracts on sports betting or casino games, Indian County will continue to urge members to vote against the Clarity Act and view its enactment as the greatest threat to tribal sovereignty in a generation.”

Senator Cynthia Lummis, one of the bill’s chief sponsors, said in a post on social media that she met with Indian Gaming Association chair David Bean in June and that he did not express opposition to the bill’s language at the time.

Stablecoin Yield Provisions Also Under Fire

Separately, the bill’s treatment of stablecoin yield and rewards has drawn criticism from the banking industry. Christopher Williston, president and CEO of the Independent Bankers Association of Texas, criticized revised yield language published Monday in a social media post, calling it insufficient to address the industry’s concerns.

The opposition from state attorneys general adds to a growing list of stakeholders pushing back on specific provisions of the bill as it moves toward a Senate vote. This, even as the legislation’s core market-structure framework continues to draw broader industry support.