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.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Do Kwon may miss the start of the March 25 trial in the SEC’s case against the former executive and Terraform Labs

article-image

Riot Platforms bought 31,500 more mining machines while CleanSpark has begun operating in Mississippi

article-image

Dencun was activated on all testnets, a blog post Tuesday said

article-image

Hut 8 also announced it broke ground on a Texas mining site

article-image

Uniswap aims to become a “complete platform for swapping” following its latest product releases

article-image

Continued demand for bitcoin ETFs coupled with greater demand for bitcoin from exchanges is contributing to price moves, analysts say