Bipartisan group of state attorneys general oppose Clarity Act over federal preemption worry
A bipartisan group of 18 state attorneys general has expressed opposition to the Clarity Act, citing concerns that the bill's ambiguous language could preempt state authority to prosecute financial fraud. The officials argue that the legislation might inadvertently hinder their ability to protect citizens from crypto-related scams and predatory market practices.
Why it matters
This conflict highlights a significant tension between federal regulatory efforts in the cryptocurrency sector and the traditional police powers of states to enforce consumer protection laws.
The letter , signed by 18 attorneys general from states and the District of Columbia, expressed concerns that if the Clarity Act were to pass, it would restrict states from bringing lawsuits against online scams under their existing securities and commodities authorities.
"We write to urge the Senate to expressly preserve the police powers of the states and ensure that the states remain armed with the tools necessary to protect the American people from predatory scammers," the letter said. "As the epidemic of online scams continues to grow, we remain firmly opposed to any federal statutory changes that would displace states’ authority to oversee the securities and commodities markets to protect everyday Americans."
The letter cited the FBI's finding that $11.4 billion had been stolen from investors last year through crypto.
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