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NY AG warns CLARITY Act could weaken state crypto enforcement
Letitia James said her office’s crypto scam complaints have tripled over three years, with losses totaling nearly $500 million over five years.
New York Attorney General Letitia James warned that federal crypto market structure legislation, the Digital Asset Market Clarity Act, could reduce the role of state regulators and shift oversight to the Commodity Futures Trading Commission. In written testimony to the Senate Permanent Subcommittee on Investigations, James argued the bill would override existing state regulation of digital asset markets.
James said complaints about crypto scams received by her office have tripled over the past three years and that reported losses totaled nearly $500 million over five years. She said that change would undermine state and local enforcement efforts.
The attorney general urged Congress to strengthen consumer protections for digital asset platforms, including requiring compliance with anti-money laundering, know-your-customer, and cybersecurity obligations. She also called for surveillance to detect suspicious activity and market manipulation.
James further recommended making platforms and intermediaries financially liable when they fail to protect customers from fraud, while also urging Congress to prohibit conversion of mixer-linked or otherwise untraceable crypto into US dollars and to preserve existing state money transmission, commodities, and securities laws. She also proposed barring elected officials and recent government officials from regulating crypto if they have financial interests in the industry, according to Cointelegraph.