New York Attorney General Letitia James is leading a bipartisan coalition of 18 state attorneys general in opposing the Digital Asset Market Clarity Act, arguing that the legislation could limit state authority to pursue cryptocurrency fraud and protect investors.

The letter, addressed to Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren, argues that the bill in its current form would preempt state authority to enforce investor-protection laws against cryptocurrency fraud and scams. The attorneys general warned that the change could make it harder for states to act as the first line of defense against crypto-related losses.

James has made cryptocurrency enforcement a prominent part of her tenure as New York's attorney general and is now pressing Congress to reject legislation designed to establish clearer federal regulatory boundaries for digital assets. She warned that the CLARITY Act could “muddy the waters” for state enforcement and said it could “embolden scammers,” while pointing to her office's record of pursuing cryptocurrency-related cases. Her office says crypto complaints in New York have tripled over the past three years, with reported losses approaching half a billion dollars over five years.

The coalition includes attorneys general from Arizona, California, Connecticut, Delaware, Illinois, Kansas, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, Ohio, Virginia, Washington, Wisconsin and the District of Columbia. The group is bipartisan, with officials from both parties joining James in opposing the bill as currently written.

Supporters of the CLARITY Act say the legislation would create clearer federal rules for digital assets and establish regulatory boundaries between the Securities and Exchange Commission and the Commodity Futures Trading Commission. State officials, however, argue that provisions involving qualified transactions could allow the SEC to preempt state registration systems and give federal regulators broader authority over areas traditionally overseen by the states.

The concerns come as cryptocurrency fraud continues to generate substantial losses. The FBI reported $11.4 billion in losses from cryptocurrency-related complaints in 2025, a 22% increase from the previous year, while the FTC reported $1.78 billion in cryptocurrency-related losses. James and the other attorneys general argue that weakening state enforcement authority would make an already significant fraud problem more difficult to address.

The letter comes ahead of Senate action on the legislation. James and the other state attorneys general are urging lawmakers to reject the CLARITY Act without changes they say are necessary to preserve state enforcement powers