Crypto Lawyer Argues Against State AGs’ Involvement In CLARITY Act Enforcement

• Crypto lawyer John Deaton argued that since the CLARITY Act is a federal law, the DOJ must have exclusive authority in enforcing its ethics rules.
• He opposed the Senate Democrats’ proposal to hand over the reins of the CLARITY Act’s ethics enforcement to state AGs, believing it would only stir confusion for market participants and would put the law at the mercy of AGs with differing interpretations.

The stakes are high as the White House and advocates rush to pass the Digital Asset Market CLARITY Act before the August recess. Recently, President Donald Trump has greenlit a compromise on the bipartisan bill’s ethics provisions, its thorniest issue by far next to the stablecoin yield debate.

Some Democratic Party members led by Senator Angela Alsobrooks threatened to vote against the bill after calling the Republican Party’s proposed ethics language an “unserious offer.” She argued that the Department of Justice (DOJ) should not have exclusive jurisdiction over the legal enforcement of the CLARITY Act’s conflict of interest safeguard. The lawmaker stated that the legislation should also give state Attorneys General (AGs) concurrent authority in enforcing its ethics rules.

John Deaton, a prominent crypto lawyer and Republican Senate candidate, has been one of Trump’s most vocal critics. Last year, he joined the crypto community in pushing for stricter digital asset regulations following the president and his family’s meme coin controversy. However, he opposed Alsobrooks’ proposal to put state AGs in charge of the CLARITY Act’s ethics enforcement.

ADVERTISEMENT## Inviting Inconsistency in the CLARITY Act

Deaton explained that handing the reins of the CLARITY Act’s ethics enforcement to state AGs invites “inconsistent, patchwork application” that will only confuse market participants. It would run counter to the bill’s general purpose, which is to provide regulatory clarity.

Additionally, the lawyer highlighted that the move will open the door to the usual politicized targeting that many state AGs usually employ against industries and individuals they disagree with. Hence, he recommended a more predictable federal enforcement mechanism rather than one that varies per state.

Deaton noted that since the CLARITY Act is federal legislation, it only makes sense for the DOJ to take the helm of its enforcement. His comments indicate that handing that power to 50 different state AGs, each with different political incentives and different interpretations, will only create more chaos rather than cohesion.

ADVERTISEMENTThe lawyer reminded people that there are currently no restrictions on government officials issuing meme coins, non-fungible tokens (NFTs), or other cryptocurrencies. He also believes that the lack of regulatory clarity for digital assets in the US contributed to the FTX fiasco and is driving retail investors to offshore crypto platforms.

Highly Politicizing the Bill Before Midterm Elections

Furthermore, Deaton claimed that senators opposing the bill are driven merely by political motivations, especially now that the midterm elections are fast approaching. He pointed out that they’re not really looking out for consumers’ best interests.

“Make no mistake about it: voting no comes down to not wanting Trump to take a legislative victory lap shortly before the midterms. Period,” said Deaton. “And it’s disgusting, unpatriotic, and hurts the people you’re claiming to want to protect.”

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