New York Attorney General Letitia James has proposed a new state law to tighten rules over cryptocurrency companies, citing “rampant fraud and dysfunction” in the industry. This is the latest move by James, who has been targeting the crypto industry with lawsuits over the past few months.
The proposed regulations include requiring independent public audits of crypto exchanges, banning people from owning both brokerages and tokens to prevent conflicts of interest, and requiring crypto platforms to reimburse customers who are victims of fraud.
Sophisticated Set Of Regulations?
Dubbed the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO), James called her proposal “the strongest and most comprehensive set of regulations on cryptocurrency in the nation.”
The legislation proposed by the Attorney General includes provisions to prevent crypto brokers and marketplaces from trading using their accounts. Additionally, it would prohibit brokers from borrowing or lending assets owned by their customers.
James said in a statement,
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. New York investors should have the peace of mind that there are safeguards in place to protect them and their money.
According to the report, the proposal will be submitted to state lawmakers for the 2023 legislative session. If adopted, it would also strengthen the authority of the New York State Department of Financial Services to regulate digital assets.
James has been vocal about overseeing the crypto industry to allegedly prevent abuses. Her lawsuits against KuCoin and CoinEx alleged they failed to register their activities properly. At the same time, another suit against Nexo Inc. and Nexo Capital Inc. resulted in a settlement of up to $24 million for New York and nine other states.
According to the attorney general, safeguarding consumers against malpractices in the crypto industry is a fundamental objective and a crucial aspect of her mandate to shield all state residents, especially vulnerable ones.
She has also stated that the risks of crypto have disproportionately harmed lower-income investors and people of color. This move by James comes amid growing concerns about U.S. regulators’ lack of regulation in the crypto industry.
Earlier this year, the European authorities detained 15 suspected crypto scam individuals. They shuttered a large-scale operation of call center networks that allegedly stole hundreds of millions of euros from victims by selling digital currencies.
While some in the crypto industry have expressed concerns about over-regulation stifling innovation, others believe proper regulation is essential for the industry to mature and gain wider acceptance. As the crypto industry continues to evolve, we will likely see more proposals for regulation in the coming years.
Meanwhile, the crypto market has continued to maintain composure despite the different news circulating in the industry. Over the past 24 hours, the global cryptocurrency market cap has surged by 1.6%, with the total value nearing $1.3 trillion.
Featured image from Unsplash, Chart from TradingView
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