preferred on
Points of Focus
- 18 state attorneys general warn the CLARITY Act would preempt state securities authority.
- Eight banking trade groups say the stablecoin circuit breaker has loopholes.
- Both letters landed Sept. 14, hours before the Sept. 15 cloture vote.
Eighteen state attorneys general and eight banking trade associations both sent the Senate letters objecting to the CLARITY Act on Sept. 14, hours before Tuesday’s scheduled 2:15 pm ET cloture vote.
18 State AGs Push Back on CLARITY Act Ahead of Key Senate Vote
New York Attorney General Letitia James led a bipartisan coalition of 17 other state attorneys general urging Congress to oppose the current version of the CLARITY Act ahead of Tuesday’s key procedural vote. The… pic.twitter.com/wQwmqjUTMj
— Wu Blockchain (@WuBlockchain) September 14, 2026
The two letters raise entirely separate concerns: One warns the bill would preempt state securities enforcement; the other says a bank-protection provision in the final text does not go far enough.
JUST IN: 8 banking trade groups say the CLARITY Act’s new stablecoin “circuit breaker” is “not a safeguard at all.” 🚨
They argue it only kicks in AFTER substantial deposit flight has already happened.
They’re also demanding tighter rules around stablecoin rewards.
Seems like… pic.twitter.com/e3MNQGtImv
— The Moon Show (@TheMoonShow) September 14, 2026
The objections land the day after Senators Cynthia Lummis, John Boozman, and Tim Scott released what they called the bill’s final text, incorporating an ethics compromise President Donald Trump had accepted with Senator Thom Tillis and Democratic Senator Ruben Gallego. That deal addressed one dispute. Tuesday’s vote now faces two more, raised the same day, by two different groups.
What the 18 state attorneys general are asking Congress to change
New York Attorney General Letitia James led a bipartisan coalition of 18 attorneys general in a letter to Senate Banking Committee leaders Scott and Elizabeth Warren, warning the CLARITY Act would let the Securities and Exchange Commission (SEC) preempt state securities registration authority. James said the bill “would embolden scammers and potentially strip attorneys general of our authority.”
The letter cites Federal Bureau of Investigation data showing $11.4 billion in reported crypto-fraud losses in 2025, up 22% from 2024, and Federal Trade Commission data showing a further $1.78 billion, up 25.6%. States have brought more than 330 anti-fraud enforcement actions in crypto since 2017, the letter says, an enforcement record the coalition argues the bill would undercut.
This is a different state-AG dispute than the one the ethics deal resolved. That agreement narrowly expanded state attorneys general’s power, letting them sue exchanges that list ethics-barred digital assets. The new letter concerns the SEC preempting states’ broader securities registration authority, a separate and, per the coalition, unresolved fight.
A separate, same-day objection from the banking industry
Eight trade associations, including the American Bankers Association, the Independent Community Bankers of America (ICBA), the Bank Policy Institute, and the Consumer Bankers Association, sent a letter the same day to Majority Leader John Thune and Democratic Leader Chuck Schumer.
The groups said the bill’s deposit-flight “circuit breaker,” meant to protect community banks from stablecoin-driven deposit losses, only activates after the damage is already done, calling it “not a safeguard at all.”
The letter also asks the Senate to close what the groups call loopholes in the bill’s ban on paying yield on payment stablecoins, including narrowing language they say would let issuers pay rewards calculated by balance, duration, and tenure, terms the letter says function economically like interest even when not labeled as such.
Specifically, the letter asks the Senate to amend Section 10404(c)(1) by removing the word “solely” from the prohibition and replacing a “functional and economic equivalence” legal test with a broader “substantial similarity” standard, changes the signatories say would make the yield ban harder to evade through creatively structured rewards.
Treasury Secretary Scott Bessent posted the same day that the final text gives him authority to act “if the facts around deposit flight change to the detriment of community banks,” and that he would not hesitate to use those tools to protect them. The banking industry’s own letter, sent hours later, says that authority does not go far enough.
I’ve said many times that the CLARITY Act is essential to ensuring America wins the global race for new technology. That’s the reason Congress passed the GENIUS Act: to ensure that stablecoin infrastructure, a revolutionary financial technology, will be built in America.…
— Treasury Secretary Scott Bessent (@SecScottBessent) September 14, 2026
Where the ethics fight stood before Tuesday’s new objections
Lummis said on X that Trump “went further” on ethics restrictions to close the deal, “including giving state attorneys general enforcement power,” after Democrats had pushed for independent enforcement beyond the Department of Justice alone. That compromise is what let Tuesday’s vote go forward at all. It did not touch the securities-preemption or stablecoin-yield disputes now on the table.
It's becoming clear that some Democrats simply won't get to yes, no matter what we put in the text.
President Trump has now agreed to two historic ethics provisions — provisions these very members demanded. We've given you everything you’ve asked for, yet you keep holding the… https://t.co/EecNNlmZVK
— Senator Cynthia Lummis (@SenLummis) September 14, 2026
Cloture needs 60 votes; Republicans hold 53, meaning at least seven Democrats or independents must join. With the House having already cleared its September calendar for midterm campaigning, a failed vote would likely push comprehensive market-structure legislation past the November elections rather than delay it by a few weeks. The vote is scheduled for 2:15 pm ET on Sept. 15, one day after both letters landed.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency prices are highly volatile. Always conduct your own research before making investment decisions.
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