The New York Attorney General (AG) Letitia James announced her latest effort to regulate the crypto industry, citing that hundreds of billions of investor funds have been lost due to fraud and “opaque business practices” in the industry. James proposed a new set of crypto regulations that would impose independent public audits of crypto firms’ financial statements, among other new rules.
New York AG Introduces CRPTO – the “Most Comprehensive” Set of Crypto Regulations
In a statement published Friday, New York AG Letitia James proposed extending state regulations over crypto-related companies, citing “dysfunction” in the nascent industry.
“Millions of investors have lost hundreds of billions in the value of their cryptocurrency investments because of rampant fraud, including market manipulation, hacking, and opaque business practices.”
– NY AG Letitia James said in a statement.
In her proposal, James suggested that the New York state impose independent public audits of crypto exchanges and ban residents from owning brokerages and cryptocurrencies to avoid conflicts of interest. James described her proposal as “the strongest and most comprehensive” set of rules over the crypto industry in the US.
In addition, if passed, the state law would demand that crypto firms reimburse users who fall prey to fraud. Further, it would also strengthen the New York State Department of Financial Services’s (NYDFS) control over digital assets in the state, James wrote in the statement.
The bill, called “Crypto Regulation, Protection, Transparency and Oversight Act (CRPTO),” will be submitted to the New York State Senate and Assembly during the 2023 legislative session. Its approval would allow James’s office to impose civil penalties of up to $10,000 for each individual who breaks the law. For each violation by a crypto firm, the civil penalty would increase up to $100,000.
New York Regulators Show No Sign of Stopping Clampdown on Crypto
James’s proposal for the new law marks the latest effort by New York state regulators in their crackdown on the crypto industry this year. In March, the Attorney General’s office filed a lawsuit against the crypto exchange Ku Coin, accusing the company of providing brokerage services without properly registering.
Similarly, the NYDFS ordered crypto firm Paxos to stop issuing new Binance USD (BUSD) tokens, alleging that the dollar-backed stablecoin is an unregistered security. More recently, the New York regulator adopted new rules allowing it to collect supervisory fees from licensed crypto companies.
But not only the New York watchdogs are cracking down on crypto. The rapidly-growing digital asset industry has drawn the attention of multiple federal and government agencies, such as the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), following a series of high-profile collapses in 2022 that affected millions of crypto investors.
This article originally appeared on The Tokenist
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