The New York Attorney General (AG), Letitia James, has announced her intention to implement rigorous regulations for the cryptocurrency industry to protect investors from fraudulent practices and increase transparency. With billions of dollars lost to deceitful activities, James proposes a revolutionary set of crypto regulations, including mandatory independent public audits of financial statements for crypto firms and other stipulations.
A Bold and Comprehensive Set of Regulations
AG Letitia James, in a statement issued on Friday, urged for broader state oversight of crypto-related businesses, pointing out the “dysfunction” in the burgeoning sector. Her proposal encompasses mandatory independent public audits of crypto exchanges and barring residents from owning brokerages and cryptocurrencies to prevent conflicts of interest. James describes her proposal as the “strongest and most comprehensive” set of rules for the US crypto industry and is committed to driving significant change.
The CRPTO Act: Safeguarding Users and Enhancing Oversight
Upon enactment of the proposed state law, crypto firms would have to compensate users who become victims of fraud. Additionally, the legislation would strengthen the New York State Department of Financial Services’ (NYDFS) jurisdiction over digital assets within the state, as mentioned by James.
The “Crypto Regulation, Protection, Transparency, and Oversight Act (CRPTO)” is set to be submitted to the New York State Senate and Assembly during the 2023 legislative session. If approved, the AG’s office would be authorized to impose civil penalties of up to $10,000 per individual found in violation of the law. Civil penalties for crypto firms could increase to $100,000 for each infraction.
New York’s Persistent Pursuit of Crypto Industry Regulation
The proposed CRPTO Act marks the latest effort by New York state regulators to tighten control over the crypto industry. In March of this year, the Attorney General’s office filed a lawsuit against crypto exchange Ku Coin, accusing the company of providing brokerage services without proper registration.
In another case, the NYDFS ordered crypto firm Paxos to halt issuing new Binance USD (BUSD) tokens, asserting that the dollar-backed stablecoin constitutes an unregistered security. Recently, the New York regulator implemented new rules, allowing it to collect supervisory fees from licensed crypto companies.
Federal and Government Agencies Keeping a Close Eye on Crypto Industry
New York regulators are not the only ones ramping up efforts to oversee the crypto space. The rapidly growing digital asset industry has attracted the attention of several federal and government agencies, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This increased scrutiny follows a series of high-profile collapses in 2022, which have affected millions of crypto investors.
