New York Attorney General Letitia James testified to a Senate investigations panel on Monday opposing the Digital Asset Market Clarity Act, which Coinbase wants passed as early as August 3. The bill would transfer most crypto rulemaking to the Commodity Futures Trading Commission (CFTC) and override state investor protection laws. James argues this would eliminate state enforcement capabilities that handle 99.5% of criminal cases and 98.8% of arrests nationwide, leaving crypto scam victims with no recourse at the state level. The House passed the bill in July 2025 with a 294-134 vote, and it cleared a key Senate committee in May. The conflict centers on whether federal or state authorities should lead crypto fraud enforcement as losses reach $11.4 billion according to FBI data.
Digital Asset Market Clarity Act Provisions and State Law Override
The Digital Asset Market Clarity Act would hand most crypto rulemaking to the Commodity Futures Trading Commission (CFTC). The bill would override state investor protection laws, which James's office uses to police securities and commodities for 20 million New Yorkers. The House passed the bill in July 2025 with a vote of 294 to 134. It cleared a key Senate committee in May.
FBI and FTC Report Crypto Scam Losses Exceeding $11 Billion
James's testimony presented four separate datasets on crypto scam losses:
| Source | 2025 losses | Change from 2024 |
|:-------|:------------|:-----------------|
| FBI Internet Crime Complaint Center | $11.4 billion | Up 22% |
| FTC Consumer Sentinel Network | $1.78 billion | Up 25.6% |
| TRM Labs illicit volume estimate | $158 billion | Up about 145% |
| New York complaints | Nearly $500 million over 5 years | Almost tripled in 3 years |
The FBI reported that the average victim lost $62,604. Crypto complaints to the bureau rose 21% in a year. James cited cases including one scam that worked through Haitian church prayer groups and another that used Facebook ads to target Russian speakers before transferring money to Vietnam.
State and Local Agencies Handle 99.5% of Criminal Cases
James argued that state and local agencies constitute 99% of all US law enforcement bodies. These agencies handle approximately 99.5% of criminal cases and 98.8% of arrests, while federal authorities handle roughly 1.2%. The Justice Department told prosecutors in April 2025 to stop charging platforms for what their users do 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 resulted in judges finding violations.
Bill's Ethics Ban Includes One-Year Delay and Blind Trust Exception
The bill would stop presidents and federal officials from launching their own crypto. The ban would allow the sitting president to park existing crypto businesses in a blind trust and would not start until a full year after the bill becomes law. James proposed that officials should not regulate any industry they earn money from, with violations resulting in profit return plus a $50,000 fine each time. Her testimony pointed to Binance, which 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.
National Sheriffs' Association and State Regulators Oppose Section 604
The National Sheriffs' Association wrote to the Senate on May 13 targeting Section 604 of the bill. That section would excuse mixers and similar tools from money transmitter rules. The sheriffs stated they want crypto rules but prefer a narrower version written by Senator Catherine Cortez Masto. State securities regulators' national body urged senators to vote no in May.
Coinbase Chief Policy Officer Expects Vote by August 3
Faryar Shirzad, Coinbase's chief policy officer, told Fox Business that China is spending the most on building the next financial system. He said the question is who writes the rules, Washington or Beijing. Shirzad stated that one section of the bill protects banks from legal surprises when they touch crypto. He said he has talked to Senate leaders and expects a vote as early as August 3. Goldman Sachs CEO David Solomon backs the bill even though he calls it flawed, while JPMorgan's Jamie Dimon opposes it.
Senate Majority Leader Thune Says Votes Are Missing
Senate Majority Leader John Thune said on July 23 that the votes are missing. The bill now looks unlikely to pass before the August break. Three issues remain unresolved: ethics rules, the Section 604 exemption, and how stablecoins pay interest. James's office went after major platforms including Genesis, which paid $2 billion, and Gemini, which returned $50 million to customers.
FAQ
What did New York Attorney General Letitia James testify about on Monday?
New York Attorney General Letitia James testified to a Senate investigations panel on Monday opposing the Digital Asset Market Clarity Act, arguing that the bill would override state investor protection laws and eliminate state enforcement capabilities that handle 99.5% of criminal cases nationwide.
How much did the FBI report in crypto scam losses for 2025?
The FBI Internet Crime Complaint Center reported $11.4 billion in crypto scam losses for 2025, representing a 22% increase from 2024, with the average victim losing $62,604.
When does Coinbase expect a Senate vote on the Digital Asset Market Clarity Act?
Coinbase chief policy officer Faryar Shirzad said he expects a Senate vote on the Digital Asset Market Clarity Act as early as August 3, though Senate Majority Leader John Thune stated on July 23 that the votes are missing for passage before the August break.
