New York warns CLARITY Act could weaken crypto enforcement

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NY warns on CLARITY Act

Highlights

New York Attorney General Letitia James warns the proposed Digital Asset Market Clarity Act would override state regulation and centralize crypto oversight under the Commodity Futures Trading Commission.
James reports crypto scam complaints received by her office tripled in three years, with nearly $500 million in consumer losses reported over five years.
James urges Congress to ban converting mixer-linked crypto into U.S. dollars, maintain state-level regulations, and enact stricter conflict-of-interest rules for officials regulating the crypto sector.

Congressional testimony outlines enforcement concerns

As reported by Cointelegraph, James submits written testimony on Monday to the Senate Permanent Subcommittee on Investigations urging Congress to tighten oversight of cryptocurrency companies rather than centralize authority under the proposed Digital Asset Market Clarity Act.

She says the bill would override state regulation of digital asset markets and move oversight to the Commodity Futures Trading Commission, a shift she argues weakens state and local enforcement. James adds that complaints about crypto scams received by her office have tripled over the past three years, while reported losses total nearly $500 million over five years.

James also calls for crypto platforms to comply with anti-money laundering, know-your-customer and cybersecurity requirements. She says platforms should monitor suspicious activity and market manipulation and should face financial liability when they fail to protect customers from fraud.

Broader implications for crypto regulation

Beyond enforcement structure, James urges Congress to prohibit the conversion of mixer-linked or otherwise untraceable crypto into U.S. dollars and to preserve existing state money transmission, commodities and securities laws.

She also proposes barring elected officials and recent government officials from regulating crypto when they may hold financial interests in the industry. Her position highlights a widening policy divide as some crypto advocacy groups support passage of the CLARITY Act while resistance grows around tougher ethics and accountability rules.

In our earlier article on Kalshi’s Fed-related event contracts, we examined how prediction markets let traders place yes-or-no bets tied to real-world outcomes and how pricing on those contracts was reflecting shifting energy-market tensions and expectations for Fed policy. We also noted how the regulatory debate around these products is intensifying, with questions over whether federal oversight via the CFTC should preempt state-level control.

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