Washington sees the YPG as distinct from the PKK and as a valuable partner in the fight against Islamic State in Syria.
"We are facing a picture where terrorist organizations are constantly supported, strengthened and are confronting us".
"Assaults on freedom of speech, the press, and free assembly have become tragically commonplace in Erdogan's Turkey".
The decision is meant to accelerate the operation to recapture the key Islamic State group stronghold of Raqqa.
In a statement, the Turkish Embassy blamed the violence on the demonstrators, saying they were "aggressively provoking Turkish-American citizens who had peacefully assembled to greet the President".
"We can not lift the rule of emergency unless everything reaches peace and welfare", Erdogan told a meeting of business leaders in Istanbul.
"When we take this step we don't speak or consult with anyone as we don't have any time to waste". "What we saw yesterday - a violent attack on a peaceful demonstration - is an affront to D.C. values and our rights as Americans", said D.C. Mayor Muriel Bowser.
His comments came hours after Ankara said the United States should dismiss its special envoy in the battle against Islamic State, citing his support for the Kurdish militia.
Ankara considers the YPG to be a terrorist group linked to the outlawed PKK, which has been fighting a decades-long insurgency in Turkey. "It would be beneficial if this person is changed", Foreign Minister Mevlut Cavusoglu told NTV television. The Turkish embassy released a statement on May 17 that contradicted US officials and video evidence, blaming instead the demonstrators, who, it said, had been "aggressively provoking Turkish-American citizens who had peacefully assembled to greet the president".
Differences over Syria policy have caused friction with North Atlantic Treaty Organisation ally Washington. By facilitating Armenian Genocide denial, by remaining silent regarding Turkey's illegal blockade of Armenia, by disregarding its support for ISIS and al Qaida, by overlooking Turkey's suppression of its religious and national minorities and its widening repression against its citizens-at-large, the USA has only emboldened the Erdogan regime to become more aggressive, both inside and outside of Turkey.
But the police said they are also working with the US State Department and Secret Service "to identify and hold all suspects" - suggesting that they are seeking to interview Erdogan's security detail.
"We should throw their ambassador the hell out of the United States of America", said McCain on MSNBC's Morning Joe show, in response to video that appears to show the violence.