New York Attorney General Letitia James proposed legislation to grant her office greater authority to regulate the cryptocurrency industry.
The Wall Street Journal reports (WSJ) that New York Attorney General Letitia James proposed a new state law to tighten the rules governing crypto firms. James claims additional measures must be taken as the industry suffers from “rampant fraud and dysfunction.”
The proposed legislation, dubbed Crypto Regulation, Protection, Transparency, and Oversight (CRPTO), introduces a rule in which New York requires independent audits of cryptocurrency exchanges and prohibits people from owning both brokerages and tokens in an effort to prevent conflicts of interest.
James explains that her proposal would be “the strongest and most comprehensive set of regulations on cryptocurrency in the nation.”
The proposal further requires crypto platforms to reimburse customers who have fallen victim to fraud and would strengthen the New York State Department of Financial Services’ authority to regulate digital assets. To this end, Attorney General James said:
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.
Bloomberg reports, CRPTO, if adopted by state legislators, would also prevent crypto brokers and marketplaces from trading in their accounts and would ban brokers from borrowing and lending customer assets.
James said in a statement:
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. New York investors should have the peace of mind that there are safeguards in place to protect them and their money.
As an elected official, James seeks jurisdiction to enforce crypto firms’ violations of the law, issue subpoenas, and impose civil penalties of $10,000 per violation for every individual or $100,000 per violation for each crypto firm, according to the WSJ.
The AG also seeks authority to shutter businesses that engage in alleged fraud and illegality.
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