NY AG James, banks and Senate Democrats complicate CLARITY Act path

The U.S. Senate has delayed action on the CLARITY Act before the Aug. 8 recess as pressure builds from multiple sides around the crypto market-structure bill. New York Attorney General Letitia James warned the proposal would weaken state anti-fraud authority by preempting state registration and reducing the number of “cops on the beat,” while banking groups that otherwise support the bill are seeking narrow changes to block stablecoin interest, rewards, bonuses or other yield-like incentives that they say could pull deposits from community banks and the broader banking system. Democratic senator Catherine Cortez Masto said she and two law-enforcement groups feel “good” about proposed revisions sent to the White House, including changes tied to developer liability and ethics provisions. Senate Majority Leader John Thune has indicated the bill is unlikely to clear the chamber before the break, and prediction-market and analyst estimates of 2026 passage have fallen, including Polymarket at 27% and Galaxy Digital at 30%. SEC Chair Paul Atkins said the agency is “ready, willing, and able” to write rules covering much of the same ground if Congress does not act, though he said legislation would provide more durable certainty.