New York Introduces Stricter Regulations on Cryptocurrency
New York’s attorney general (AG) Letitia A. James has announced a new bill aimed at regulating the cryptocurrency market. This bill is one of the strongest pieces of legislation to date targeting the oversight and monitoring of an industry that has been associated with numerous crimes and fraud-related activities.
Establishing a Clear Regulatory Framework
The bill seeks to establish a clear regulatory framework for cryptocurrencies, requiring exchanges and related entities to register with the Financial Crimes Enforcement Network (FinCEN). AG James believes that it is time to bring law and order to the multi-billion-dollar industry and protect New York investors.
Addressing Fraud and Dysfunction
Cryptocurrency has been involved in a number of high-profile fraud activities, leading to the loss of millions of dollars for investors. The collapse of the cryptocurrency market exchange FTX, for example, resulted in significant financial losses for crypto investors worldwide.
The CRPTO Act
The bill, titled “Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act,” includes provisions to make cryptocurrency transactions more transparent, protect investors against fraud schemes, and remove any conflict of interest.
- Companies must conduct independent audits of their financial standing and publish the results.
- Companies must provide robust information to users regarding risks and other conflict-of-interest disclosures.
- Cryptocurrency promoters must report and register their interest in the crypto asset classes they promote.
Previously, many companies operated without proper registration and licensing, using misleading information to deceive unsuspecting victims in fraud schemes.
Bolstering Investor Protection
- Cryptocurrency companies must make provisions to reimburse customers who are victims of fraud.
- The designation “stable coin” can only be used for an asset if it is backed 1:1 with the U.S. dollar or a high-quality liquid asset.
Strict KYC Procedures
The bill also requires cryptocurrency exchanges to implement strict Know Your Customer (KYC) procedures, including government-issued identification and personal information verification. This will help prevent fraudulent activity and provide law enforcement with information to investigate and prosecute cryptocurrency-related crimes.
A Major Victory for Consumers and Investors
The passage of this bill would be a major victory for consumers, investors, and law enforcement agencies in the United States. State senator James Sanders Jr. emphasizes the importance of safeguarding constituents against the threats associated with the growing cryptocurrency industry.