New York Attorney General Letitia James unveiled a proposed bill on May 5 aimed at expanding regulatory oversight over cryptocurrency firms. Dubbed the CRPTO Act, this groundbreaking legislation seeks to strengthen regulations within the crypto industry in order to safeguard investors, consumers, and the overall economy. In a tweet, James, the regulatory chief, emphasized that the bill introduces common-sense measures to combat fraud and dysfunction in the cryptocurrency space.
James highlighted the significant financial losses suffered by investors due to fraud in the cryptocurrency industry, with a disproportionately adverse impact on low-income investors and people of color. In her view, just as banks and other financial services are subject to regulation, the cryptocurrency industry must also be held accountable. Accordingly, the proposed legislation mandates that crypto firms reimburse customers who have fallen victim to fraud on their platforms and undergo both public and independent audits.
Moreover, the bill aims to restrict crypto firms from engaging in activities such as lending and borrowing users’ assets. It also seeks to ensure that investors are provided with comprehensive information regarding the risks and conflicts of interest associated with crypto companies. Additionally, the legislation prohibits the owners of crypto platforms from simultaneously creating crypto tokens.
Another crucial aspect of the bill is its proposal to expand the authority of the Office of the Attorney General to take legal action against companies that violate the proposed laws. Furthermore, the New York State Department of Financial Services would be granted enhanced powers to regulate digital assets.
Under Letitia James’ leadership, the Office of the Attorney General of New York has already initiated several enforcement actions against crypto firms, including KuCoin, as well as individuals such as Alex Mashinsky, the founder of the now-bankrupt Celsius. These actions exemplify the office’s commitment to enforcing existing regulations in the crypto space.
