NY AG Letitia James told Congress the CLARITY Act would weaken state crypto fraud enforcement. FBI data shows $11B in crypto losses. Senate action uncertain.
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New York Attorney General Letitia James told Congress the pending CLARITY Act would weaken state enforcement against digital asset scams, citing FBI data showing Americans reported more than $11 billion in crypto-related losses last year.
James testified before a Senate committee July 27, urging lawmakers to preserve state authority to pursue fraud cases. She said the bill, which would transfer primary oversight of crypto to the Commodity Futures Trading Commission, overrides important state regulatory powers.
“My office has been leading the fight against cryptocurrency fraud,” James said in her prepared remarks. “Without adequate laws and regulations, financial crises ensue.”
Complaints submitted to her office about crypto scams nearly tripled over three years, with reported losses approaching $500 million over five years, she said. The FBI separately said Americans filed 181,565 crypto-related complaints in 2025, totaling more than $11 billion. Total cyber-enabled losses across all categories hit nearly $21 billion.
James also pushed back on the GENIUS Act, which would create a federal stablecoin framework, arguing it fails to require issuers to return stolen funds to fraud victims. She recommended that Congress restrict crypto transactions that cannot be fully traced from converting into U.S. dollars. She also proposed banning elected officials and recent government employees from participating in crypto regulation when financial conflicts exist.
Federal lawmakers are still debating the CLARITY Act. The House approved it in July 2025, and a year later House lawmakers renewed their push at a hearing examining the bill’s proposed digital asset framework. Senate action remains uncertain. The CLARITY Act delay risks US crypto lead, Haridopolos warns has drawn attention to the legislative standoff.
James highlighted several enforcement settlements to support her case: Tether, Coin Café, Gemini, Genesis, Kucoin, and a recent agreement requiring Uphold to pay more than $5 million over its promotion of the CredEarn investment program. Her office has also warned residents about “pig butchering” romance scams that target crypto investors.
Stand With Crypto, a Coinbase-backed advocacy group, said its supporters have contacted lawmakers one million times with seven days left before the August congressional recess. The group is pushing for the CLARITY Act’s passage, setting up a direct clash with state regulators who want it blocked.
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