New York Attorney General Proposes Stringent Regulations for Crypto Industry Amid Rampant Fraud and Dysfunction

New York Attorney General Proposes Tighter Regulations for Crypto Companies

New York Attorney General Letitia James has drafted a new state law aimed at strengthening the rules governing cryptocurrency companies. The proposed regulations are born out of the “rampant fraud and dysfunction” plaguing the industry, according to James. Her latest proposal follows a string of lawsuits brought against crypto companies over the last few months.

If adopted, the new regulation will require independent public audits of crypto exchanges and force crypto platforms to reimburse customers who fall victim to fraud. Additionally, it will ban brokers from borrowing or lending assets owned by their customers and would prohibit people from owning both brokerages and tokens to prevent conflicts of interest.

According to a report, the proposal will be submitted to state lawmakers for the 2023 legislative session. If approved, the proposal will also strengthen the New York State Department of Financial Services’ authority to regulate digital assets.

NY Attorney Keen On Crypto Regulation

James has been vocal about the need for oversight in the crypto industry, citing abuse as the reason. Earlier this year, she settled a suit brought against Nexo Inc. and Nexo Capital Inc., resulting in a settlement of up to $24 million for New York and nine other states. Protecting consumers from malpractices in the crypto industry is a fundamental objective for James, who holds the mandate of shielding all state residents, especially the vulnerable.

The proposed legislation is in response to growing concerns about the lack of regulation in the crypto industry among US regulators. While some in the industry worry that over-regulation may stifle innovation, others believe it is critical for the industry to mature and gain wider acceptance. In recent years, the crypto industry has undergone significant evolution, and there will likely be more proposals for regulation in the future.

Despite news of heightened regulation, the global cryptocurrency market cap remained stable. In the last 24 hours, it has grown by 1.6%, approaching $1.3 trillion in total value.