A coalition comprising seventeen state attorneys general from both major political parties has publicly urged members of the United States Senate to vote against the legislation commonly referred to as the Clarity Act. This bipartisan alliance, representing a broad geographic and ideological spectrum, voiced a shared concern that the bill, which aims to impose new regulatory frameworks on digital assets and cryptocurrency activities, could unintentionally hamper law‑enforcement officials’ ability to bring forward effective securities and commodities actions against fraudsters operating online. The attorneys general emphasized that their primary responsibility is to protect consumers, investors, and the broader public from deceptive schemes that exploit the rapid growth of digital finance.
In recent years, the United States has witnessed a surge in scams that masquerade as legitimate crypto investments, initial coin offerings, or blockchain‑based services. These schemes often involve false promises of high returns, fabricated partnerships, or outright theft of funds through phishing and ransomware attacks. State prosecutors have been at the forefront of dismantling such operations, leveraging both state securities statutes and federal commodity regulations to pursue civil and criminal remedies.
According to the coalition’s statement, the Clarity Act’s proposed restrictions—particularly those that would limit the jurisdiction of state attorneys general in pursuing securities and commodities claims tied to crypto‑related fraud—represent a dangerous step backward. The AGs argue that the bill’s language appears to centralize authority at the federal level, potentially creating a single point of failure and reducing the agility that state‑level enforcement has historically provided. They note that many of the most successful prosecutions of crypto scams have been conducted by state offices, which can act quickly, coordinate with local law‑enforcement agencies, and tailor their approaches to the specific nuances of each case.
Furthermore, the attorneys general highlighted the importance of maintaining a robust, multi‑layered regulatory environment. By allowing both state and federal entities to exercise oversight, the United States can ensure that no single jurisdiction becomes overwhelmed or under‑resourced. The coalition warned that stripping state AGs of their authority could lead to gaps in enforcement, allowing sophisticated fraudsters to exploit jurisdictional loopholes and evade accountability. In their view, a collaborative framework—where federal agencies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) work alongside state prosecutors—offers the most comprehensive protection for investors.
The AGs also pointed to concrete examples from recent years to illustrate the tangible impact of state‑level actions. In 2022, a coordinated effort between the New York Attorney General’s office and the SEC resulted in the shutdown of a major fraudulent token offering that had defrauded thousands of small investors out of millions of dollars.
Similarly, the Texas Attorney General’s office successfully secured a judgment against a scheme that used a fake decentralized finance (DeFi) platform to siphon funds from unsuspecting participants. These cases underscore how state resources, local knowledge, and the ability to act swiftly are essential components of an effective enforcement strategy. In addition to safeguarding investors, the coalition argued that preserving state enforcement powers is critical for fostering innovation within the legitimate cryptocurrency sector.
Clear, predictable regulatory guidance that balances consumer protection with the flexibility needed for emerging technologies can encourage responsible development and attract legitimate businesses. Overly restrictive or ambiguous federal legislation, they contend, may stifle innovation, drive legitimate projects abroad, and ultimately harm the U.S. economy. The bipartisan group of attorneys general called on Senators to consider these ramifications carefully before casting their votes.
They urged lawmakers to amend the Clarity Act to retain state jurisdiction over securities and commodities matters related to digital assets, or to include explicit provisions that ensure state agencies can continue to pursue fraud cases in coordination with federal bodies. The AGs offered to work collaboratively with Congress to draft language that addresses the concerns raised while still achieving the broader goal of enhancing transparency and consumer protection in the crypto market.
In summary, the seventeen attorneys general—spanning states from the Pacific Northwest to the Deep South, and representing both Democratic and Republican leadership—have presented a united front against provisions of the Clarity Act that they believe would diminish the effectiveness of state‑level enforcement against online scams involving cryptocurrencies. Their message to the Senate is clear: protect the ability of state prosecutors to act swiftly and decisively against fraud, maintain a cooperative regulatory framework, and ensure that any new legislation strengthens, rather than weakens, the overall defenses available to American investors and consumers.