New York Attorney General Letitia James has proposed new regulations aimed at tightening cryptocurrency oversight and protecting investors. The Crypto Regulation, Protection, Transparency, and Oversight Act (CRPTO) would require cryptocurrency firms to undergo independent audits, ban brokers from borrowing customers’ assets, and ensure tokens and coins are not managed as broker-dealers. Additionally, cryptocurrency exchanges would not be authorized to hold customer funds like a bank. The bill proposes transparency and independent audits, alongside offering fines and mandatory closure of firms breaking the law. City Comptroller Brad Lander, state Comptroller Thomas DiNapoli, and several state legislators are backing the bill, although New York Governor Kathy Hochul and Mayor Eric Adams have not publicly stated their positions.
New York regulators have already implemented regulations this year to control the cryptocurrency industry. The CRP_TO Act takes the crackdown measures further, with the proposals seeking to clamp down on market manipulation, banning brokers from borrowing investors’ digital assets, and strengthening the state’s control over digital currencies. The regulations seek to ensure that cryptocurrencies are not managed as broker-dealers, making the industry safer for investors.
The CRPTO Act aims to enhance investor safeguards by requiring “know-your-customer” provisions, compensation for fraud victims, and prohibiting stablecoins not tied to high-quality liquid assets.
In addition, the Criminal Referral and Prosecution of Transparent Obstructive Practices Act would give the attorney general’s office the ability to fine individuals $10,000 per offence and companies $100,000, as well as the ability to demand damages, penalties, and restitution. The state legislature would need to approve the bill for it to become law.
The proposed legislation is in response to a series of high-profile failures in the cryptocurrency industry, including the failure of Voyager Digital to register as a security in New York, allegations that the CEO of Celsius defrauded investors, and the illegal tactics reportedly used by bankrupt crypto exchange, KuCoin.
In conclusion, the CRP_TO Act aims to toughen up regulations for the cryptocurrency industry and protect investors. The proposed regulations will undergo review by state lawmakers in the current legislative session. If approved by the state legislature, the proposed CRPTO Act will establish strong investor safeguards, making the digital currency industry safer and more transparent.
