New York is imposing stricter regulations on cryptocurrencies.
New York 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 aimed at overseeing and monitoring the activity of an industry that has been at the forefront of numerous crimes and fraud-related activities.
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). According to AG James, โrampant fraud and dysfunction have become the hallmark of cryptocurrencies and it is time to bring law and order to this multi-billion dollar industry. New York investors should have peace of mind knowing that safeguards are in place to protect them and their money. All investments are regulated to account for every penny of investors' money; Cryptocurrencies should not be an exception.โ
Since its rise to prominence as a financial entity, cryptocurrencies have been used in a number of high-profile fraudulent activities, many of which have been reversed and taken down by federal agencies. Popular among them is the collapse of FTX where owner Samuel Bankman-Fried, founder and former CEO of cryptocurrency The FTX market exchange was said to have played a role in leading to the loss of millions of dollars for cryptocurrency investors around the world.
The bill, titled โCryptocurrency Regulation, Protection, Transparency and Supervision (CRPTO) Act,โ stipulates a number of provisions that would make cryptocurrency transactions more transparent, protect investors against fraud schemes, and eliminate any conflict of interest.
Cryptocurrency Enthusiasts are often unaware of the financial situation of cryptocurrency companies and, as such, are not aware of the risk of associating with them. The new bill seeks to guarantee transparency by ensuring that companies:
- Carry out independent audits of financial situation and publish them.
- Provide robust information to users about risks and other conflict of interest disclosures.
- To ensure that cryptocurrency promoters report and register their interest in the classes of cryptoassets they promote.
Many companies had previously operated without proper registration and licensing using misleading information to deceive unsuspecting victims in fraud schemes.
Another key provision of the bill aims to strengthen investor protection by:
- Ensure that cryptocurrency companies take steps to refund customers who are victims of fraud.
- Prohibit the designation "stablecoin" for an asset except when it is backed 1:1 with the US dollar or a high-quality liquid asset.
The bill also requires cryptocurrency exchanges to implement strict Know Your Customer (KYC) procedures, including government-issued identification and verification of personal information. This would help prevent fraudulent activities and provide authorities with information to investigate and prosecute cryptocurrency-related crimes.
The bill is an important step forward in combating fraud and crypto crimes in the United States. Many agree that passage of the bill would be a huge victory for consumers, investors and law enforcement agencies. According to State Senator James Sanders Jr., โAs the cryptocurrency industry grows and captures investor interest across the state, it is imperative that our constituents are adequately protected from current threats.โ
Sources:
New Cryptocurrency Bill Targets Crypto Crime and โRampant Fraudโ Across the US
Attorney General James Proposes Nation-Leading Regulations on Cryptocurrency Industry
