Summary State attorneys general oppose CLARITY Act provisions they believe could weaken fraud enforcement, licensing authority, and investor protections across American markets. The Senate pr
The CLARITY Act faces growing state opposition before the Senate’s vote at 2:15 p.m. ET today. New York Attorney General Letitia James leads a bipartisan coalition challenging provisions that could weaken state enforcement authority. The legislation requires 60 votes to advance, meaning Republican leaders need support from Democratic senators.
In a September 14 letter to Senate Banking Committee Chair Tim Scott and Ranking Member Elizabeth Warren, 18 attorneys general opposed provisions that would affect fraud prosecutions and state securities registration requirements.
The group urged senators to reject the bill unless Congress preserves state regulatory and enforcement powers. Although the proposal retains certain state fraud powers, officials fear unclear restrictions could support challenges against investigations and prosecutions. Consequently, defendants could argue that federal rules override securities laws, delaying enforcement while courts determine jurisdiction.
States have brought more than 330 cryptocurrency anti-fraud actions since 2017, targeting platforms, advisers, and investment schemes. The FBI recorded $11.4 billion in crypto-related complaint losses during 2025, marking a 22% annual increase.
BREAKING: NY AG Letitia James leads 18-state letter to Senate opposing Clarity Act.
• Bill strips state powers to prosecute scams.
• SEC preemption overrides state registration rules. pic.twitter.com/LSwJCo03DI
— Bitcoin Archive (@BitcoinArchive) September 14, 2026
Also Read: Ripple CEO Warns Senate Against Abandoning Clarity Act Over Policy Disputes
Meanwhile, banks are still opposing the legislation from a different point of view. The American Bankers Association (ABA) and other banking groups have argued that community banks may lose deposits as investors could pull funds from legacy platforms onto stablecoin yield-offering platforms. They say that this could reduce funding available for loans and small business credit.
The stablecoin yield dispute mirrors banking opposition to money market mutual funds during the 1970s. According to official documents shared by Omid Malekan on X, banking groups presented similar arguments before a Senate Banking subcommittee in 1980.
Malekan shared a January 1980 letter from the Independent Bankers Association of America to Senator Alan Cranston. The association warned that money market funds could drain deposits, weaken lending, and place smaller banks under pressure.
Many of us have mentioned how the stablecoin yield debate playing out in Clarity, and the arguments made against yield by the bank trades, mirror the battle over money market funds in the 1970s. Well here's some proof.
Here's a letter submitted by the Independent Bankers… pic.twitter.com/jSu0Hg7ulC
— Omid Malekan (@malekanoms) September 14, 2026
Publicly offered money market funds increased from one in 1972 to 78 by mid-1979. Their combined assets reached approximately $50 billion as investors sought market-based returns unavailable through restricted bank accounts. However, money market fund assets reached trillions without eliminating bank deposits. Federal Reserve research placed bank deposits near $18 trillion in 2022.
Stablecoins and money market funds have different structures, protections, and liquidity risks. Nevertheless, the precedent challenges claims that competing yield products could inevitably destroy bank funding. Senators must weigh state enforcement concerns when deciding whether the CLARITY Act advances or returns to negotiations.
Also Read: This XRP Whale is Sitting on $962,000 30-Day Profit – Here’s What They Did
The post CLARITY Act Faces State Opposition as Senate Prepares for a Key Vote Later Today appeared first on 36Crypto.
