Trump’s ethics concession addresses one hurdle for the crypto bill, but 18 state attorneys general say the revised legislation would weaken state oversight.
The CLARITY Act is heading for a crucial US Senate procedural vote on Tuesday after President Donald Trump agreed to most of a bipartisan proposal to strengthen ethics restrictions around public officials’ crypto interests, according to various reports.
However, the latest compromise hasn’t resolved all of the opposition, with a bipartisan group of state attorneys general now urging senators to reject the bill over concerns that it would weaken state oversight of the crypto industry.
A coalition of 18 state attorneys general, led by New York Attorney General Letitia James, argued in a letter to Senate Banking committee leaders that the CLARITY Act would make it harder for states to take action against crypto companies accused of fraud or other misconduct.
“While the current draft of the CLARITY Act reserves certain powers for states to prosecute fraud, the language is often ambiguous, unclear, or confined in ways that either create the opportunity to challenge state police powers or outright deprive the states of their ability to continue to combat the scam epidemic,” the letter said.
Their opposition adds another complication for the legislation. While the revised bill would give state attorneys general a role in enforcing new ethics restrictions, the group argues that other provisions would weaken their authority to police the crypto industry.
The CLARITY Act is considered a landmark piece of US crypto legislation that would establish a federal market structure for digital assets, clarify when crypto assets fall under securities or commodities laws and delineate oversight responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
As Cointelegraph reported, Senate Majority Leader John Thune filed the cloture motion on CLARITY last month after lawmakers failed to advance the legislation before leaving Washington for their August recess. Tuesday’s procedural vote will determine whether the bill advances to Senate debate.
Related: CLARITY Act vote meets Fed rate hike: Five things to know in Bitcoin this week
The state AGs weighed in just as lawmakers appeared to be making progress on another major sticking point in the CLARITY Act. The Associated Press reported Sunday that Trump had agreed to “about 80%” of a proposal from Republican Senator Thom Tillis and Democratic Senator Ruben Gallego, according to a senior GOP aide.
The bill already barred federally elected officials, their spouses and federal judges from issuing digital assets, but the latest compromise would go further. Officials with a “significant” financial interest in a crypto issuer would be required to divest or place the interest in a blind trust. State attorneys general would also be given a role in enforcing the restrictions.
The concessions address some of the concerns raised by Democrats and Tillis, who had argued that earlier ethics provisions did not go far enough to address potential conflicts involving Trump’s crypto holdings and business interests.
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