New York State Attorney General Letitia James (Letitia James) submitted written testimony to the Senate Standing Committee on July 28, warning that the federal Digital Asset Market Clarity Act (CLARITY Act) could supersede state-level regulatory authority and calling on Congress to establish stricter consumer protection rules for crypto platforms. In her testimony, James said that over the past five years, New York State has suffered cumulative losses of nearly $500 million from cryptocurrency scams.
James’s Written Testimony: New York’s Crypto Scam Losses Nearly $500 Million in Five Years
According to the written testimony James submitted, New York’s crypto scam data is as follows: the number of crypto scam complaints received over the past three years has tripled; cumulative losses over the past five years are nearly $500 million. James noted this is only the portion voluntarily reported by the public, and the actual figures could be higher.
She warned that if the CFTC adopts the CLARITY Act to unify and take over regulation, local law enforcement agencies would lose tools to investigate scams and track down illegal platforms. She pointed to a specific California case: in 2025, the California Securities Commission (COS) issued $4.5 million in fines to three crypto platforms for failing to retain transaction records. If federal standards are unified, California could lose those enforcement tools.
James’s 5 Core Demands: From Anti-Money Laundering to Conflict-of-Interest Bans
Based on James’s written testimony to the Senate Standing Committee, the five core demands are as follows:
Anti-money laundering rules: Crypto platforms must comply with AML (anti-money laundering), KYC (know-your-customer), and cybersecurity standards, and monitor suspicious transactions and market manipulation.
Financial accountability: Platforms should be held financially responsible when they fail to protect consumers, giving platforms an incentive to do risk control well.
Ban mixers-for-cash-DA conversion: Prohibit the use of crypto mixers or untraceable crypto exchanges for USD conversion to ensure that asset flows are transparent.
Preserve state laws: Maintain existing state laws governing money transmission, commodities, and securities, so the federal bill does not automatically replace local rules.
Conflict-of-interest ban: Prohibit voters or officials with financial interests in the crypto industry from participating in regulatory decision-making.
The CLARITY Act to be sent to the full chamber by end of July; uncertainty remains before August recess
According to the original report, the latest legislative progress of the CLARITY Act is as follows: it has passed the Senate Banking Committee and is expected to be sent for a full-chamber vote by the end of July. The Senate majority leader warned that the two parties still have disagreements on the details, and whether it can pass before the August recess remains uncertain.
James’s written testimony this time is the first public written view from enforcement agencies on the bill’s content. James emphasized: “The market structure, consumer demographics, and scam patterns are different in every state. A single federal standard cannot cover all situations.”
FAQ
What are the latest loss data for New York crypto scams?
According to the written testimony James submitted on July 28, the number of crypto scam complaints received in New York over the past three years has tripled; cumulative losses over the past five years are nearly $500 million, and this is only the portion voluntarily reported by the public.
What core demands has James put forward for the CLARITY Act?
According to the written testimony, the five core demands are: AML/KYC anti-money-laundering rules, platform financial responsibility, a ban on mixers-for-cash conversion, preserving state laws, and prohibiting officials with financial interests in crypto from participating in regulatory decision-making.
What is the current legislative progress of the CLARITY Act?
According to the original report, the CLARITY Act has passed the Senate Banking Committee and is expected to be sent for a full-chamber vote by the end of July. However, the Senate majority leader warned that the two parties still have disagreements on the details, and whether it can pass before the August recess remains uncertain.
