18 State AGs Oppose CLARITY Act Ahead of Senate Procedural Vote

The CLARITY Act is heading for a critical US Senate procedural vote on Tuesday, but a bipartisan coalition of 18 state attorneys general led by New York AG Letitia James is urging senators to reject the crypto market structure bill, arguing that its language would undermine state authority to prosecute fraud and misconduct in the digital asset industry. In a letter to Senate Banking Committee leaders, the group warned that while the current draft reserves certain powers for states, the language is "ambiguous, unclear, or confined in ways that either create the opportunity to challenge state police powers or outright deprive the states of their ability to continue to combat the scam epidemic."

The state AG opposition adds a new complication to a bill that had recently gained momentum. Senate Majority Leader John Thune filed the cloture motion on CLARITY last month after lawmakers failed to advance the legislation before the August recess. The procedural vote will determine whether the bill moves to full Senate debate. The legislation would establish a federal market structure for digital assets, clarify the boundary between securities and commodities laws, and delineate oversight responsibilities between the SEC and the CFTC.

A separate breakthrough came over the weekend, when President Donald Trump agreed to roughly 80% of a bipartisan ethics proposal from Republican Senator Thom Tillis and Democratic Senator Ruben Gallego, according to a senior GOP aide speaking to the Associated Press. The compromise addresses one of the bill's most contentious provisions by tightening restrictions on public officials' crypto interests, though full details of the accepted language were not immediately disclosed.

Despite that progress on ethics rules, the state attorneys general contend that other sections of the revised bill would weaken their enforcement authority against crypto firms accused of fraud, even as the legislation grants them a role in policing the new ethics framework. With Tuesday's cloture vote looming, the CLARITY Act faces competing pressures from both sides of the aisle as lawmakers weigh federal preemption against state-level consumer protection.