New York Attorney General Proposes ‘Landmark’ Crypto Legislation
On Friday, May 5, 2023, New York Attorney General Letitia James proposed a state law to tighten regulations on the cryptocurrency industry to protect investors, consumers, and the broader economy.
The bill called the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act will require crypto companies to refund customers who are victims of fraud, force independent and public auditing of crypto companies, stop crypto companies from borrowing or lending investors’ assets, and provide investors with risk and conflict of interest information about crypto companies. Additionally, the proposal will give the Office of the New York State Attorney General the power to enforce these laws and shut down companies that violate them.
“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,” said Attorney General James. “New York investors should have the peace of mind that there are safeguards in place to protect them and their money. All investments are regulated to account for every penny of investors’ money — cryptocurrency should be no exception. These commonsense regulations will bring more transparency and oversight to the industry and strengthen our ability to crack down on those that don’t pay respect to the law.”
The bill comes as New York is stepping up its attempts to regulate the cryptocurrency market. James recently filed lawsuits against CoinEx and KuCoin, charging the two exchanges of operating without proper registration as dealers of commodities and securities.
The proposal received mixed reactions within the crypto community, with some applauding James for protecting New Yorkers from financial harm, while others view it as politically motivated.
John E. Deaton, Managing Partner at the Deaton Law Firm, tweeted, in response to a statement made by John Reed Stark, Senior Lecturing Fellow at Duke University School of Law, that other states in the US may ignore the regulations. Deaton referred to a previous instance in which New York sought to outlaw Bitcoin but numerous other US states took a different approach.
“John, come on my friend. You really think a bill pushed by a very politically motivated Letitia James, AG of New York – New York of all places – is going to set the example for other states to follow? NY pushed banning #BTC mining while other states pass opposite legislation,” Deaton said.
