State attorneys general are urging the Senate to reject the Clarity Act, a stalled crypto bill they say would strip states of authority to police securities markets. In a Sept. 14 letter, a bipartisan coalition told Senate Banking Committee leaders that the legislation should preserve states' police powers and tools to protect consumers from fraud.
Experts differ on the right balance. Aaron Klein of the Brookings Institution said capital market regulation belongs at the federal level, but states already have authority to stop fraud and should more aggressively monitor payment processors and prosecute criminals. CFTC Commissioner Mersinger countered that state enforcement happens only after a crime, arguing federal oversight is needed to prevent harm before lawsuits are filed.
Lawmakers haven't abandoned the bill. Sen. Thom Tillis reversed his vote to oppose it, allowing a motion to reconsider in the Senate, though midterm elections are now the focus.