New York Attorney General Letitia James took a firm stand Monday against the Digital Asset Market Clarity Act, warning that it would leave crypto scam victims without proper protection. The bill, favored by Coinbase and moving quickly through the Senate, aims to transfer most crypto regulatory power to the Commodity Futures Trading Commission (CFTC), effectively overriding state investor safeguards.
State vs. Federal Oversight in Crypto Regulation
James, whose office oversees securities and commodities regulations for 20 million residents in New York, argues this bill strips away critical state authority to protect victims. She sent detailed testimony to a Senate investigations panel emphasizing the surge in crypto fraud losses and the key role of state and local agencies in enforcement. Unlike federal bodies, state and local law enforcement handle nearly all criminal cases and arrests in the US.
The bill already passed the House with a 294-134 vote and cleared a Senate committee earlier this year, but James insists tougher crypto oversight is needed, not less. She highlighted losses reported by multiple sources, including the FBI’s Internet Crime Complaint Center, which noted a 22% increase in crypto-related losses in 2025, reaching $11.4 billion. also crypto complaints to the FBI jumped 21% in one year, with an average victim loss of $62,604.
James also raised concerns over the bill’s ethics provisions, which ban federal officials from launching new crypto ventures but allow existing holdings to be managed in blind trusts, starting a year after enactment. She argues this doesn’t go far enough to prevent conflicts of interest.
The debate comes as federal agencies like the SEC have cut back on crypto enforcement, closing over 1,000 investigations in 2025 alone and dropping several cases amid judicial findings of violations. on top of that, the Justice Department disbanded its crypto enforcement unit and told prosecutors to avoid charging platforms for users’ actions, signaling a retreat from aggressive oversight.
This clash between state and federal approaches marks a critical moment for crypto regulation in the US. Coinbase’s push to fast-track the bill shows the industry’s drive for a unified federal framework, but New York’s Attorney General warns the change could leave victims vulnerable.
