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

New York Attorney General Letitia James tackles crypto in new proposal

article-image

lev radin/Shutterstock modified by Blockworks

share

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 news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Featured.png

Research

Helium stands at a pivotal moment in its evolution as a decentralized wireless network, balancing rapid growth, economic restructuring, and global expansion. With accelerated growth in domestic DAUs and Hotspots supporting its network, Helium is leveraging strategic partnerships and innovative proposals to scale internationally. The recent implementation of HIP 138, “Return to HNT,” has unified its token economy under HNT, simplifying participation and strengthening liquidity, while HIP 139’s phase-out of CBRS refocuses efforts on scalable Wi-Fi offload. Meanwhile, governance shifts under HIP 141 raise questions about centralization as Nova Labs consolidates control over the roadmap.

article-image

In 2011, WikiLeaks faced a financial blockade imposed by the US government. It was Bitcoin’s first major test.

article-image

Kado’s founder Emery Andrew spoke to Blockworks about the acquisition and what’s next for the team

article-image

LayerZero’s Bryan Pellegrino chatted with Blockworks about the firm’s next steps and its 10-year runway

article-image

Colosseum co-founder Matty Taylor is seeing “high-performance [Solana] founders showing a lot of interest in private trading technology”

article-image

Executives weigh the growth potential they see in the public stock and private credit/equities arenas

article-image

Players can stake ME, trade tokens and link wallets to climb the leaderboard