Crypto’s ‘Rampant Fraud and Dysfunction’ Needs ‘Law and Order,’ NY AG Says

New York Attorney General Letitia James tackles crypto in new proposal


lev radin/Shutterstock modified by Blockworks


The conflict around state versus federal cryptocurrency regulation heats up with a new effort in New York to further establish itself as a policy pioneer. 

New York State Attorney General Letitia James plans to bring a bill to state legislators next month that would require crypto companies to complete audits, submit financial statements and increase fraud protection. 

“Rampant fraud and dysfunction have become the hallmarks of cryptocurrency and it is time to bring law and order to the multi-billion-dollar industry,” James wrote in a statement Friday. 

The proposed bill, known as the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act, also includes new rules around custody and lending; increasing scrutiny around which companies are allowed to hold assets and facilitate leverage trading. 

The news comes as lawmakers across the country continue to disagree over how to oversee the growing crypto industry. 

New York leaders have maintained their approach to cryptocurrency regulation is one of the more advanced in the US. The state rolled out its BitLicense in 2015, a policy that prompted some companies to cease operating in the state. Since then, other states, including Illinois and New Jersey, have expressed interest in passing similar regulations based on New York’s framework.  

Rep. Ritchie Torres, D-N.Y., said he would not be inclined to support any legislation that undermined New York’s current stablecoin regulatory policy during an April stablecoin hearing in the House

Some New York state regulators have taken what the industry sees as a slightly more crypto-friendly approach. 

During April’s hearing, witness Adrienne A. Harris, superintendent of the New York State Department of Financial Services, countered a popular narrative that crypto is to blame for recent banking collapses. 

“It is a misnomer that the failure of Signature Bank was related to crypto,” Harris said during the hearing, in response to a question from Rep. Maxine Waters, D-Cali., about crypto’s role in the banking crisis. 

Stablecoins, which have long been speculated to be the first area of policy congressional leaders will tackle with digital assets, are also a concern in James’ new proposal. 

The CRPTO Act would limit companies from being able to use the term ‘stablecoin;’ only allowing assets fully backed dollar-for-dollar to be labeled as such.

Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.

Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.

Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

The State of LSTFi


There are five broad use cases for LSTs that are gaining traction alongside growth in demand: leverage farming, liquidity providing, LST baskets, stablecoin collateral, and interest rate derivatives.



Newly announced Republican presidential hopeful Ron DeSantis claimed that the crypto industry would be doomed if President Biden is reelected


The 7-day average trading volumes for bitcoin have dropped to their lowest level in two and a half years alongside a muted derivatives market


Alexander Vinnik’s lawyers aim to swap his freedom for detained WSJ reporter Evan Gershkovich


This latest update will introduce immutability to token metadata but ensure that its key characteristics are preserved, and it will also introduce network fees


In a blog post, partly directed at the forthcoming Eigenlayer protocol, the Ethereum co-founder cautions against overloading consensus


Hunting for victims in Ethereum’s public mempool, automated searchers prey on transactions as they are discovered in a practice called MEV