CLARITY Act faces fresh pressure ahead of key Senate cloture vote
- The CLARITY Act faces fresh pressure as 18 attorneys general urged the Senate to reject the revised bill.
- Treasury Secretary Scott Bessent said the latest draft gives his office additional authority to protect community banks from stablecoin-related risks.
- The CLARITY Act is set for a cloture vote on Tuesday, with 60 votes required to clear the Senate threshold.
The CLARITY Act is facing fresh opposition from a bipartisan group of state attorneys general ahead of a key Senate vote, with the officials urging lawmakers to reject the legislation unless changes are made to preserve state enforcement powers.
18 attorneys general warn CLARITY Act could weaken state powers
In a letter to Senate Banking Committee leaders on Monday, 18 attorneys general from various states and the District of Columbia argued that the bill could weaken states’ ability to pursue crypto scams and protect investors.
The coalition stated that states have brought more than 330 anti-fraud enforcement actions against crypto scammers since 2017, including cases involving fraudulent websites and schemes. The officials warned that ambiguities in the current CLARITY draft could give bad actors opportunities to challenge or delay state enforcement actions.
“Enforcing our laws against those defrauding investors in our states is an important function and an essential complement to federal authority,” the attorneys general wrote.
The group also raised concerns about state licensing and registration authority over securities intermediaries and transactions. The coalition argued that these powers remain important tools for investigations, examinations and investor protection. It called for narrowly tailored exemptions to preserve state authority.
The attorneys general further objected to provisions they said could give the Securities and Exchange Commission (SEC) indirect preemption authority through a “qualified transaction” provision.
They added that the measure could disrupt the existing balance between federal and state regulators and called for removing or substantially narrowing those provisions. The letter concluded with a direct call to reject the current legislation.
“The Senate should vote NO on the current version of the CLARITY Act unless and until the states’ powers to police the market and protect investors are fully preserved,” the coalition stated.
Senate vote approaches as CLARITY Act faces regulatory headwinds
The opposition comes as Senate Republicans released another version of the bill on Sunday night. It included concessions to Democrats on government ethics and other provisions, including the potential criminal prosecution of decentralized finance (DeFi) projects.
However, the recent development has left uncertainty over whether enough Democratic support can be secured to clear the Senate’s 60-vote threshold.
Opposition is also emerging from the banking sector over stablecoin provisions. Banking trade groups warned that allowing yield on payment stablecoins could contribute to deposit flight and reduce credit and lending.
The crypto industry and its supporters have nevertheless continued to back the legislation as it approaches Tuesday’s planned cloture vote.
Treasury Secretary Scott Bessent continued his support for the legislation, arguing that the CLARITY Act is “essential to ensuring America wins the global race for new technology.”
In an X post on Monday, Bessent wrote that the latest draft gives the Treasury Secretary additional authority to respond if stablecoins cause harm to community banks, adding that he would use those tools if necessary to protect the sector.
