New York AG urges Senate to reject crypto bill backed by Coinbase

State powers at the center of dispute

James’ core objection is that the Clarity Act would shift most crypto rulemaking to the Commodity Futures Trading Commission while overriding state investor-protection laws. Her office, which oversees securities and commodities enforcement for roughly 20 million New Yorkers, argues that removing state authority would undercut the agencies most likely to act first when scams occur.

The House passed the bill in July 2025 by a 294-134 vote, and it cleared a key Senate committee in May. But James told senators that the proposal would effectively strip state and local authorities of tools they currently use to pursue fraud cases. In her filing, she argued that scam victims would lose their nearest law-enforcement option if those powers are consolidated at the federal level.

Fraud losses and enforcement concerns

To support that case, James pointed to multiple datasets showing rising crypto-related losses. According to the FBI Internet Crime Complaint Center, 2025 losses reached $11.4 billion, up 22% from 2024. The FTC Consumer Sentinel Network reported $1.78 billion, up 25.6%, while TRM Labs estimated illicit volume at $158 billion, up about 145%.

Her office also said New York complaints totaled nearly $500 million over five years and had almost tripled in three years. The FBI data cited by James showed the average victim reporting a loss of $62,604, while crypto complaints to the bureau rose 21% year over year.

James also referenced specific cases to illustrate the breadth of alleged schemes, including one that moved through Haitian church prayer groups and another that used Facebook advertisements aimed at Russian speakers before funds were routed to Vietnam.

James argues states do most of the work

A central part of the attorney general’s argument is that state and local bodies handle the overwhelming share of law enforcement in the United States. Her filing said those agencies account for 99% of law-enforcement bodies, handle about 99.5% of criminal cases and 98.8% of arrests, while federal authorities handle roughly 1.2%.

She contrasted that with what she described as a federal pullback. The Justice Department told prosecutors in April 2025 to stop charging platforms for what users do and shut down its crypto enforcement team, according to the filing. James also said the Securities and Exchange Commission closed more than 1,000 investigations in 2025 and dropped seven crypto cases, five of which judges had already found involved violations.

The filing also challenges the bill’s ethics provisions. James said the measure’s ban on presidents and federal officials launching their own crypto projects is too narrow because it would allow a sitting president to place existing crypto businesses into a blind trust and would not take effect until one year after enactment. She instead called for stricter conflict-of-interest rules, including disgorgement of profits and a $50,000 fine for each violation. Her submission cited reports by Forbes and The New York Times that Binance holds 87% of USD1, a stablecoin issued by World Liberty Financial, a firm founded by the president’s family.

Other opposition and the path ahead

James is not the only critic. The National Sheriffs’ Association wrote to the Senate on May 13 opposing Section 604, which would exempt mixers and similar tools from money transmitter rules. State securities regulators also urged senators in May to vote against the bill.

Coinbase has made a different case for passage. Chief policy officer Faryar Shirzad told Fox Business that the debate is about whether the United States or China sets the framework for the next financial system. He also highlighted provisions he says would give banks more certainty when dealing with crypto. Shirzad said he expected a vote as early as Aug. 3.

The bill’s immediate prospects remain uncertain. Thune said the votes are not there, making passage before the August recess appear unlikely for now. Outstanding disputes include the ethics language, the Section 604 exemption, and the treatment of interest-bearing stablecoins. James, whose office has pursued actions against crypto firms including Genesis and Gemini, is asking Congress not to curtail the state-level powers she says are essential to policing fraud.