Key points

  • New York Attorney General Letitia James led a bipartisan coalition of 18 attorneys general opposing the current CLARITY Act.
  • The coalition says ambiguous preemption and registration provisions could weaken state investigations, licensing and anti-fraud cases.
  • The letter arrived before a planned September 15 procedural vote and after senators added a limited state role in enforcing ethics rules.

A bipartisan coalition of 18 state attorneys general is urging the U.S. Senate to reject the current CLARITY Act, arguing that the revised cryptocurrency market-structure bill could still weaken state authority over fraud, licensing and securities registration. New York Attorney General Letitia James announced the letter on September 14, one day before a planned procedural vote that will test whether the measure has enough support to advance.

What the states want preserved

The coalition asked Congress to expressly preserve state enforcement for tokenized and conventional securities, maintain cooperation between federal and state regulators, protect state registration regimes for crypto platforms and remove language that could invite litigation over state police powers. The letter was sent to Senate Banking Committee Chairman Tim Scott and ranking member Elizabeth Warren. Its signatories include officials from Republican- and Democratic-led states, as well as the District of Columbia.

Related reporting: U.S. Senate crypto bill faces pivotal procedural test

The attorneys general focused on provisions they say could displace state licensing and registration tools or give the Securities and Exchange Commission unusually broad power to preempt state requirements through a new category of qualified transactions. They acknowledged that the draft reserves some state fraud authority, but argued that unclear limits could let defendants delay enforcement through court challenges. The letter cites more than 330 state crypto-related anti-fraud actions since 2017 as evidence that local regulators are already part of the enforcement system.

A fresh dispute after the bill was revised

The objection creates a new complication because Senate Republicans released updated bill text on September 13 with provisions designed to answer other concerns about ethics and state participation. That version allows state attorneys general to bring actions tied to conflict-of-interest rules for covered public officials, alongside federal enforcement. It also adds divestiture or qualified blind-trust requirements for certain significant digital-asset interests.

James and the coalition are addressing a different question: whether states retain broad authority over securities registration, intermediaries and fraud outside that ethics section. Their letter says a narrow enforcement role in one part of the bill does not resolve the wider preemption problem. The distinction matters for exchanges, brokers and token issuers because they could otherwise face a substantially different mix of federal and state oversight. It also matters for investors whose complaints are often first handled by state agencies.

What happens next

The Senate's initial vote is expected on September 15. Advancing the bill requires 60 votes, so the coalition's intervention adds pressure to negotiations already involving ethics restrictions, stablecoin rewards, software-developer protections and the division of authority among regulators. The letter does not itself change the bill, and lawmakers could amend the text, delay the vote or proceed without accepting the states' recommendations.

The coalition's fraud statistics underline its policy case but do not establish that the pending bill would cause additional losses. The New York attorney general cited FBI data showing $11.4 billion in reported cryptocurrency-related complaint losses in 2025, up 22% from 2024, and said New York complaints have tripled in three years. Independent reporting by The Block confirmed the coalition's opposition and the timing of the Senate test. The central uncertainty is now whether negotiators can clarify state powers without losing the votes needed to move the broader federal framework forward.

Sources

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