EIGHTEEN STATES SAY CLARITY TAKES THEIR POWER — SECTION 20109 STARTS 'UNLESS PREEMPTED'

Eighteen attorneys general asked Congress on September 14 to vote the CLARITY Act down. Seventeen states and the District of Columbia, led by Letitia James of New York, with Arizona among them. Their complaint is that the bill takes away their power to chase fraud.

We read the sections.

Section 20109 is headed FEDERAL PREEMPTION. Subsection (a) gives the Commodity Futures Trading Commission “exclusive jurisdiction” over anyone registered under that division. Subsection (b) then preserves state enforcement. Then comes subsection (c): “Unless preempted by this Act, or the amendments made by this Act, nothing in this Act … shall affect the ability of a State or local agency to investigate and bring enforcement actions regarding unfair or deceptive acts or practices.”

The protection opens by exempting whatever the bill already took.

The securities side does it twice more. One subsection keeps state consumer protection law “except as expressly provided by this division.” Another lets the Securities and Exchange Commission define “qualified transaction” and “categories of transactions, including secondary transactions” inside section 18 of the Securities Act, the provision that shuts states out of registering an offering. The agency writes the definition. The definition decides how much state law is left.

Who profits is plain enough. A platform registered federally trades fifty regulators for one.

Section 10404 is headed prohibiting interest and yield and permits it two pages later. This is the same move. The heading says one thing, the qualifier two lines down says the other, and the qualifier is what a court reads.

At the time of this writing, bitcoin was $78,568 at 11:44 AM ET on Coin Metrics.