New York Attorney General Letitia James urged Congress to tighten proposed cryptocurrency legislation, warning that it would weaken states' ability to police the industry, and urged lawmakers to add stronger anti-money-laundering and ethics safeguards.
The Clarity Act would undermine New York, which has been a leader in regulating crypto for over a decade, as well as other states, James said in written testimony on Monday to the Senate Homeland and Governmental Affairs' permanent subcommittee.
"The Digital Asset Market Clarity Act ('CLARITY') seeks to interfere with and preempt states’ investor protection laws as well as dilute our ability to prosecute fraud," James said. "This is a mistake. State and local law agencies do the lion’s share of law enforcement work in this country."
James' testimony comes as lawmakers in Washington are working to get a floor vote in the Senate for sweeping legislation that would regulate the crypto industry for the first time at the federal level. As of this week, it's unclear whether Republicans can eke out enough support to get that bill through the Senate after releasing text that so far has not garnered necessary Democratic support.
One issue has been the bill's ethics language that currently bars public officials and their spouses from issuing or sponsoring digital assets but does not cover other family members. It also gives enforcement authority to the Justice Department and includes a sunset clause that would expire the restrictions in January 2029.
