New York Attorney General Letitia James has led 17 other state attorneys general in opposing the CLARITY Act, arguing the bill could weaken state power to police crypto fraud and protect investors.
- 18 state AGs total are pushing back
- The dispute is about state power, not Bitcoin alone
- The CLARITY Act would create a federal framework for digital commodities
- States say they need enforcement tools to keep scammers in check
This is a straight-up turf war over who gets to police digital assets in the United States. And in crypto, where fraud never seems to take a holiday, that question is not some abstract D.C. hobby horse.
According to a New York Attorney General press release dated September 14, 2026, James led a bipartisan coalition of 17 other attorneys general in opposing the Digital Asset Market Clarity Act, better known as the CLARITY Act. That makes 18 state AGs in total, including New York.
The title may spotlight Bitcoin, but the fight is wider than BTC. The core dispute is about whether the federal government should take the lead on digital asset oversight in a way that limits states’ ability to investigate misconduct, register firms, and bring enforcement actions of their own.
That matters because state attorneys general are often the first officials to move when retail investors get burned. They handle complaints, pursue fraud cases, and can sometimes act faster than federal agencies buried under process and political crossfire. James’s office argues the CLARITY Act would put that role at risk.
On the other side, crypto firms have been screaming for a cleaner national framework for years. The current U.S. setup is a mess of federal overlap and state-by-state rules, which can turn compliance into a costly maze. If you run a legitimate business, that patchwork is annoying. If you’re a scammer, it can still be worth the effort.
The bill itself appears aimed at building a regulatory framework for digital commodities. Based on the Congress.gov text referenced in the research materials, it includes provisions around:
- mature blockchain system certification, a process for identifying when a network is considered sufficiently decentralized or developed for the bill’s purposes
- post-maturity reporting requirements, ongoing disclosures after a blockchain reaches that status
- intermediary registration requirements, rules for firms and middlemen handling digital commodity activity
- exemptions from state regulation, limits on what states can require in some cases
- SEC rulemaking on disclosures and market structure, federal rules meant to shape how digital assets are offered and traded
That is where the alarm bells start ringing for state AGs. If the federal framework preempts too much state authority, states fear they’ll lose the ability to move quickly against bad actors. In plain English: Washington might get the shiny new rulebook while the states get told to sit down and admire it.
James’s office says the bill could “jeopardize” the ability of states to protect investors and fight what it calls rampant digital currency fraud and scams. It also argues that states serve as “the first line of defense” and that the CLARITY Act could let federal rules override state registration authority.
The office backed that warning with some hard numbers. It said the FBI reported $11.4 billion in losses from complaints involving cryptocurrencies in 2025, up 22% from 2024, with an average reported loss of $62, 604. It also cited FTC figures showing $1.78 billion in losses from crypto complaints in 2025, up 25.6% from 2024.
Those numbers are serious, but they should be read for what they are: complaint-based loss figures cited by the New York AG, not a neat ledger of every confirmed dollar stolen. Even so, they paint the same ugly picture anyone paying attention already knows. Scammers are still making a killing in crypto, and victims are still eating the losses.
The office also said complaints to its own agency about crypto scams have tripled over the last three years, and that reported crypto scam losses in New York totaled nearly half a billion dollars over the past five years. Since 2017, it said, states have brought more than 330 anti-fraud enforcement actions in the crypto ecosystem.
That enforcement record is why James is a credible voice in this fight. Her office says it has gone after names including Letitia James, Tether, Coin Café, Gemini, Genesis, KuCoin, Nexo, and BlockFi. Agree with every case or not, the point is clear: state AGs have been active, and they do not want their tools dulled just as the market structure debate heats up.
The counterargument is not fake, either. A national framework could reduce duplication, make compliance more predictable, and stop companies from having to play regulatory whack-a-mole across 50 states. That would matter for exchanges, custodians, brokers, and Bitcoin businesses that want clear rules instead of legal fog.
For Bitcoin specifically, the impact is indirect but real. Bitcoin is not the same thing as a centrally issued token or a company run through a closed-off ledger of promises. But the broader rules around digital commodities, custody, disclosures, and exchange oversight still shape how BTC is bought, held, and traded in the U.S.
So while the title says Bitcoin, the actual fight is bigger: who gets the final say over digital asset markets, and how much room states keep to crack down when fraud shows up wearing a shiny new website and a fake promise of “guaranteed returns.”
Key questions and takeaways
-
Did Letitia James lead the opposition?
Yes. The New York AG says James led 17 other attorneys general, for 18 total. -
Is this only about Bitcoin?
No. The objection is broader and centers on digital asset oversight, state enforcement power, and crypto fraud prevention. -
What is the CLARITY Act trying to do?
It aims to build a federal framework for digital commodities, including reporting, registration, and market-structure rules. -
Why are state AGs objecting?
They say the bill could weaken their ability to protect investors and stop scams by limiting state authority. -
Why do crypto firms want the bill?
A federal framework could replace a messy patchwork of state rules with something more consistent and easier to follow. -
What is the real issue underneath the noise?
It is a fight over federal preemption versus state enforcement power in crypto regulation.
James and 17 other state AGs are warning that the CLARITY Act could tilt too far toward federal control and weaken the states’ role in policing crypto wrongdoing. That may frustrate industry players who want a cleaner national rulebook, but the warning is not coming out of thin air. In a sector still haunted by scams, collapses, and way too much “trust us, bro” energy, the battle over who gets to enforce the rules is only getting started.
Further reading
A few more angles on the CLARITY Act fight and the state-versus-federal enforcement showdown:
- Letitia James Leads 18 State AGs Against CLARITY Act
- Online Service Not Available
- States Push Back on the Clarity Act: Crypto Ethics and Enforcement Debate
- Letitia James Leads 18-State Push to Block CLARITY Act Over Crypto Fraud Concerns
- U.S. Senators Target Crypto Fraud and Ethics With CLARITY Act Amendments
- Letitia James Warns CLARITY Act Could Weaken State Crypto Fraud Enforcement
