17 State AGs Push Senate To Reject Crypto CLARITY Act

Crypto Regulation & US Policy News

A bipartisan group of 17 state attorneys general is calling on the Senate to block the CLARITY Act, a sweeping crypto market structure bill set for a procedural floor vote on Sept. 16. New York Attorney General Letitia James led the effort, and attorneys general from California, Illinois, Arizona, Kansas, Ohio, and Wisconsin were among those who signed the letter.

The letterwent to Senate Banking Committee Chair Tim Scott and ranking Democrat Elizabeth Warren on Sept. 14. It arrived one day before the Senate is due to hold a cloture vote, the procedural step that requires 60 votes to advance. Senate Republicans had released an updated version of the bill on Sept. 13 as part of a push to reach that threshold.
James and her co-signers argued the bill would make it harder for state prosecutors to pursue fraud cases and hold companies accountable. Their central objection is a provision they say would allow the Securities and Exchange Commission (SEC) to override state-level securities registration systems. They described this as an “unprecedented grant of authority” that could dismantle existing state regulatory frameworks.
“As written, the Clarity Act would embolden scammers and potentially strip attorneys general of our authority to protect our states’ investors and their wallets,” James said. The group also warned that vague language throughout the bill could invite future legal challenges to state enforcement powers. James had raised similar objections in earlier rounds of the legislation, calling for tighterAnti-Money Laundering (AML) rules and stronger ethics language.

Last-Minute Changes Before the Senate Vote

Senate Republicans added several new provisions to the revised bill in an attempt to win Democratic votes. One change removes the Justice Department from enforcing conflict-of-interest rules for public officials and hands that role to state attorneys general instead. That shift was driven by Democratic concern about President Donald Trump’s crypto holdings, which include assets tied to World Liberty Financial and his Official Trump (TRUMP)meme coin and have grown to hundreds of millions of dollars.
The bill also introduces a mechanism giving the Treasury secretary the ability to impose an 18-month pause onstablecoin reward payments. That pause could be triggered if payment stablecoins cause large deposit outflows from community banks. The provision is framed as a temporary guardrail for smaller financial institutions against disruption from large-scale capital movement.

Related Article: An Imperfect CLARITY Act Beats More Delay, Say Crypto Execs

State Enforcement Powers at the Center of the Debate

Other changes in the revised bill narrow money-transmission registration requirements for certain software developers. The amendments also add a civil safe harbor, introduce affiliate trading guardrails under the Agriculture Committee, and clarify how state consumer protection laws apply to digital assets.

James and the other signers said those adjustments do not address their core concerns. They argued the SEC preemption provision alone is enough reason to vote against the bill. “Together with my attorney general colleagues, I urge Congress not to pass the Clarity Act,” James wrote.

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