NY AG warns crypto bill would weaken state enforcement

New York Attorney General Letitia James has urged Congress to significantly revise a major federal cryptocurrency bill, warning that the proposed legislation would undermine state enforcement powers and leave consumers vulnerable to fraud. In written testimony submitted on Monday, July -27, 2026, to a Senate investigations subcommittee, James argued that the Digital Asset Market Clarity Act would preempt state investor protection laws and shift primary oversight of digital assets to the Commodity Futures Trading Commission.

James contends that this federal preemption would neuter state and local law enforcement agencies, which she says conduct the vast majority of enforcement work in the United States. Her testimony cited figures indicating these agencies are responsible for approximately 98.8 percent of arrests nationwide. She warned that stripping states of their authority would leave victims of crypto scams with fewer avenues for recourse, noting that complaints about such fraud received by her office have tripled over the past three years, with reported losses nearing $500 million over five years.

The attorney general called for Congress to add stronger consumer protections...