New York state may soon have its own legislation to prevent crypto scandals on par with The fall of FTX. Attorney General Letitia James has proposed a law, the CRPTO Act (Crypto Regulation, Protection, Transparency and Supervision), which is intended to thwart cryptocurrency fraud and protect investors. Whether or not this is the โstronger and more comprehensiveโ set of crypto regulations that James touts, it would theoretically prevent a repeat of some high-profile incidents.
The CRPTO Act would prohibit conflicts of interest, such as owning multiple practices or marketplaces trading on their own. Companies would have to publicly report financial statements, including risk disclosures. There would be a host of safeguards for investors, such as know-your-customer requirements, compensation for fraud victims, and a ban on stablecoins (crypto currencies whose value is tied to a secure asset) that are not directly tied to the US currency. or "high quality" liquid assets.
The bill would allow the Attorney General's office to shut down violators of the law and fine individuals $10,000 per violation and businesses $100,000 per violation. The office would also have the power to issue subpoenas and demand damages, penalties, and restitution. Meanwhile, the Department of Financial Services would have authority to license various crypto service providers.
James pointed to multiple real-world examples of alleged abuse that the CRPTO law could stop. Terraform Laboratoriesfor example, he promised a very high interest rate of 20 percent to investors in one token on his exchange if they bought the company's other token, allegedly hiding the real value of the assets. Celsius, meanwhile, bought its own token and created an artificial appearance of demand. That left investors "shocked" when Celsius declared bankruptcyaccording to the Attorney General.
The federal government is already cracking down on crypto fraud. The Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) believe existing rules already cover numerous crypto-related activities and, in some cases, have competed to claim primary responsibility for regulating the technology. politicians in the Home and Senate they are pushing for regulations at the national level. However, New York's efforts go a step further in tackling crypto-specific issues, and the state's role as a financial hub may allow it to dictate policies that guide businesses in the US.
