• New York Attorney General Letitia James has proposed a new state law to tighten rules over cryptocurrency companies.
• 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.
• If adopted, it would also strengthen the authority of the New York State Department of Financial Services to regulate digital assets.
New York Attorney General Proposes Crypto Regulations
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. 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.”
Proposed Regulations
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. The proposal will also require independent public audits of crypto exchanges, ban people from owning both brokerages and tokens to prevent conflicts of interest, and require crypto platforms to reimburse customers who are victims of fraud.
Strengthen Authority Of NYDFS To Regulate Digital Assets
If adopted, it would also strengthen the authority of the New York State Department of Financial Services (NYDFS) to regulate digital assets such as cryptocurrencies like Bitcoin or Ethereum. 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 against financial malpractices or misconducts that could potentially harm them financially or otherwise.
Targeting Cryptocurrency Industry With Lawsuits
The move comes after James has been targeting the crypto industry with lawsuits over recent months for alleged abuses within its ranks. Her lawsuits against KuCoinand CoinExalleged they failedto register their activities properly while another suit against Nexo Inc., Nexo Capital Inc., resulted in a settlementof up to $24 millionfor New Yorkand nine other states .
Submission To State Lawmakers For 2023 Legislative Session
The report will be submittedto state lawmakers forthe 2023 legislative session for adoption into law if passed by majority vote in favor thereof .