State Attorneys General Oppose CLARITY Act Ahead of Senate Vote

The CLARITY Act is set for a crucial procedural vote in the U.S. Senate on Tuesday, following President Donald Trump’s agreement to most of a bipartisan ethics proposal. However, a coalition of 18 state attorneys general, led by New York Attorney General Letitia James, has urged senators to reject the bill, citing concerns that it would diminish state authority over crypto‑related fraud.

State AGs Raise Oversight Concerns

In a letter to Senate Banking Committee leaders, the attorneys general argued that the current draft of the CLARITY Act contains ambiguous language that could limit state police powers or deprive states of the ability to combat scams. They contend that while the bill assigns a role to state AGs in enforcing new ethics restrictions, other provisions would weaken their overall enforcement authority.

Key Provisions of the CLARITY Act

• Establishes a federal market structure for digital assets.
• Clarifies when crypto assets fall under securities or commodities laws.
• Defines oversight responsibilities between the SEC and the CFTC.
• Bars federally elected officials, their spouses, and federal judges from issuing digital assets.
• Requires officials with a “significant” crypto interest to divest or place the interest in a blind trust.
• Gives state attorneys general a role in enforcing ethics restrictions.

Senate Procedural Vote

Senate Majority Leader John Thune filed a cloture motion on the CLARITY Act last month after the legislation stalled before the August recess. The upcoming vote will determine whether the bill proceeds to full Senate debate.

Industry Reaction

The crypto sector has expressed optimism about the bill’s potential to create a clearer regulatory framework. Republicans have described the latest compromise as their “last, best and final offer” to Democrats.