Letitia James Leads 18 State AGs Against CLARITY Act Over Bitcoin (BTC) Oversight

18 State AGs Sign Monday Letter

A bipartisan bloc of 18 state attorneys general has formally asked the U.S. Senate to reject the Digital Asset Market Clarity Act, the market-structure bill that would set the first comprehensive federal framework for Bitcoin (BTC) and other digital assets. New York Attorney General Letitia James heads the group, which delivered a letter dated Sept. 13 to Senate Banking Committee Chair Tim Scott and ranking Democrat Elizabeth Warren. The signers include lead prosecutors from California, Arizona, Connecticut, Kansas and Ohio, plus the District of Columbia, and the coalition crosses party lines — Republicans Kris Kobach and Andy Wilson joined Democrats such as Rob Bonta. At the core of the objection is the bill's “qualified transaction” definition, which the attorneys general argue would let the Securities and Exchange Commission unilaterally reset the scope of federal preemption and override state registration authorities. They further contend that the draft language reserving fraud-prosecution powers for the states is vague enough to let defendants challenge state enforcement actions in court. Citing FBI data, the letter notes that $11.4 billion was stolen from investors through crypto scams last year, and it urges senators to vote no on the legislation absent changes that expressly preserve state police powers.

Tuesday Vote Needs 60 Senators

The intervention lands one day before the Senate's procedural vote, scheduled for Tuesday, where Republicans need 60 votes to advance the bill and hold only 53 seats — leaving the outcome dependent on Democratic support. Senate Republicans released a revised version of the more than 600-page text on Sunday as negotiations with Democrats continued. One concession gives state attorneys general a role in enforcing conflict-of-interest restrictions covering public officials, replacing an earlier approach that would have placed that power primarily with the federal Justice Department. Ethics provisions have been a persistent sticking point, driven by President Donald Trump's crypto interests through World Liberty Financial and the TRUMP memecoin. The legislation has already traveled a long road: the House passed its version 294 to 134 in July 2025, and the Senate Banking Committee advanced its own proposal 15 to 9 in May 2026, but the chamber left for its August recess without a floor vote.

Stablecoin Rewards Circuit Breaker

Sunday's revision also tackles stablecoin yield, one of three disputes that stalled the bill through the summer. The updated text would empower the Treasury secretary to impose an 18-month “circuit breaker” on stablecoin rewards when payment stablecoins cause substantial deposit outflows from community banks — a temporary intervention rather than a permanent blanket restriction. Banks warn that rewards on stablecoins could drain traditional deposits, while crypto firms have pushed to preserve them tied to customer activity, a debate familiar to anyone tracking yield farming across DeFi. Opposition to the broader draft is widening: the Independent Bankers Association of Texas called the revised yield text “a joke” and “a meaningless nothing”, and the Indian Gaming Association blasted what it sees as the largest expansion of CFTC authority since the 2010 Dodd-Frank bill — spanning contracts well beyond perpetual contracts into sports-betting prediction markets, a sector platforms like Hyperliquid have pushed into. Senator Cynthia Lummis, a chief sponsor, said on X that IGA Chair David Bean raised no opposition when they met in June. The draft also narrows money-transmission registration for developers of decentralized exchanges and other noncustodial software, creating a civil safe harbor. Readers tracking the market in real time can follow live spot and futures prices on Gate.

“a joke” and “a meaningless nothing”https://x.com/IBAT_CLW/status/2099469431927722422

Proposal, Not Yet Law

Our reading of the primary documents: the operative text here is the Sept. 13 letter itself, addressed to Senate leadership and signed by all 18 attorneys general, explicitly urging a no vote — not a summary of it. The CLARITY Act remains a proposal, not a final rule: it has cleared the House and committee but binds no entity until enacted, and the state officials are trying to keep it that way in its current form. If passed as drafted, the qualified transaction definition would shift digital asset oversight toward the SEC and away from state securities and commodities regimes that the signatories say handled more than 330 crypto-related cases since 2017. Tuesday's vote count is the number to watch.