New York Attorney General Letitia James is pressing Congress to strengthen cryptocurrency oversight without curbing states’ ability to pursue fraud cases, arguing that a pending federal bill would move policy in the opposite direction.
In Senate testimony on July 27, James said the CLARITY Act would shift primary oversight of digital assets to the Commodity Futures Trading Commission while overriding important state authority. Her appeal came as the FBI reported that Americans logged more than $11 billion in crypto-related losses in 2025.
James says federal action should not displace state enforcement
James told lawmakers that stronger federal safeguards are needed for crypto markets, but said those measures should preserve the power of state authorities to investigate scams and hold digital asset firms accountable.
According to her testimony, the CLARITY Act would make that more difficult by concentrating primary oversight at the federal level under the CFTC and limiting tools states now use in fraud cases. James said her office has been at the forefront of crypto fraud enforcement and argued that confidence in markets depends on a rules-based system backed by adequate laws and regulation.
She framed the issue as broader than consumer losses alone, saying weak safeguards can damage investors, the economy, and national security.
State complaint data points to growing scam activity
James backed her warning with figures from New York. Complaints submitted to her office about cryptocurrency scams have nearly tripled over the past three years, according to the testimony.
Over the past five years, reported crypto fraud and scam losses cited by her office approached $500 million. Those figures were presented as evidence that lawmakers should be expanding protections rather than narrowing state authority.
Her recommendations cover AML, tracing, and platform liability
Beyond opposing limits on state enforcement, James outlined several measures she wants Congress to adopt. She urged lawmakers to require crypto platforms to follow anti-money laundering and know-your-customer rules, meet cybersecurity standards, and maintain market surveillance obligations.
She also called for financial responsibility when fraud could have been prevented, while keeping in place existing securities, commodities, and money transmission laws. In addition, she recommended restricting cryptocurrency transactions that cannot be fully traced once converted into U.S. dollars.
James further argued that elected officials and people who recently left government service should be barred from participating in crypto regulation when financial conflicts may exist.
FBI loss figures add weight to the debate in Washington
The broader federal picture added urgency to James’s message. The FBI said Americans reported nearly $21 billion in cyber-enabled losses in 2025, with crypto-related complaints accounting for the largest reported losses.
According to the bureau, 181,565 complaints involving cryptocurrency totaled more than $11 billion. That data has added pressure around pending digital asset legislation as lawmakers weigh how much authority should rest with federal regulators and how much should remain with states.
New York has also tried to address crypto-related consumer harm outside formal enforcement through public warnings, including alerts about relationship-based investment scams often described as pig butchering schemes. James has separately criticized the GENIUS Act, saying it does not require stablecoin issuers to return stolen funds to fraud victims. The next confirmed step is continued congressional consideration of crypto legislation, including the CLARITY Act, as debate over enforcement powers continues.
Source: news.bitcoin.com