New York Attorney General Letitia James came out swinging against the Digital Asset Market Clarity Act this week, arguing the bill would gut state investor protections and make it harder to go after crypto scammers. The legislation, which passed the House in July 2025 and cleared a key Senate committee in May, would hand most crypto rulemaking to the Commodity Futures Trading Commission and override state enforcement laws. James isn't alone — the National Sheriffs' Association and state securities regulators have also urged senators to vote no.
Why James is fighting the bill
James says the bill would strip her office of tools it uses to crack down on fraud. The numbers back up the concern: the FBI's Internet Crime Complaint Center reported $11.4 billion in crypto scam losses in 2025, up 22% from the year before. The FTC logged $1.78 billion, a 25.6% jump. TRM Labs estimated $158 billion in illicit volume — a roughly 145% increase. In New York alone, complaints hit nearly $500 million over five years, almost tripling in the last three. The average victim lost $62,604, per the FBI.
James proposes stricter ethics rules than the bill's version. The current bill would let the sitting president park existing crypto businesses in a blind trust and wouldn't take effect for a year. James wants profit disgorgement and $50,000 fines for violations.
The opposition beyond New York
The National Sheriffs' Association opposes Section 604, which would exempt crypto mixers from money transmitter rules. They want a narrower version backed by Senator Catherine Cortez Masto. State securities regulators also told senators to reject the bill. The opposition matters because state and local agencies handle about 99% of all US law enforcement bodies and 98.8% of arrests — federal authorities handle just 1.2%.
The timing isn't great for supporters. The Justice Department told prosecutors in April 2025 to stop charging platforms for user actions and shut down its crypto enforcement team. The SEC closed more than 1,000 investigations in 2025 and dropped seven crypto cases, five of which had already found violations. Critics say the bill would further weaken oversight.
Supporters and the math problem
Coinbase's chief policy officer Faryar Shirzad argues the bill is needed to compete with China in building the next financial system and that it protects banks from legal surprises. He expects a Senate vote as early as August 3. Wall Street is split: Goldman Sachs CEO David Solomon supports the bill, calling it flawed, while JPMorgan CEO Jamie Dimon opposes it.
But Senate Majority Leader John Thune said on July 23 that the votes aren't there, making passage before the August break unlikely. That leaves the bill's fate uncertain.
Three unresolved fights
Three open fights remain: ethics rules, the Section 604 mixer exemption, and how stablecoins pay interest. The stablecoin issue is particularly sticky — Binance holds 87% of USD1, a stablecoin issued by World Liberty Financial, a firm founded by the president's family, according to Forbes and the New York Times. That concentration raises questions the bill doesn't fully answer.
Thune's July 23 comment that the votes are missing is the most concrete signal yet. Shirzad still expects a vote by August 3, but the math looks tight.
