NY Attorney General Proposes Crypto Regulation, Protection, Transparency and Oversight Act
New York Attorney General Letitia James has proposed new legislation that would expand her office’s authority to regulate the cryptocurrency industry, according to a report by the Wall Street Journal.
The bill, named the Crypto Regulation, Protection, Transparency and Oversight Act, or CRPTO, would give the attorney general’s office broader enforcement power over crypto firms operating in New York, while affirming the New York State Department of Financial Services’ (NYDFS) authority to license and oversee digital asset licensing in the state.
The CRPTO bill seeks to address issues within the crypto industry by requiring crypto exchanges to undergo independent public audits of their financial statements and to reimburse defrauded customers. Additionally, the proposed legislation aims to limit conflicts of interest by prohibiting the same individuals from issuing tokens and owning marketplaces where the tokens trade.
The bill would also require crypto firms to have know-your-customer procedures and would prevent the use of the term “stablecoin” to market cryptocurrencies unless their values maintain a one-to-one ratio with the dollar. Violations of the law would result in civil penalties of $10,000 per violation for individuals or $100,000 per violation for crypto firms, as well as the authority to shut down businesses engaged in alleged fraud and illegality.
The NYDFS, which supervises over 30 crypto companies, currently issues “BitLicenses” to crypto firms and conducts examinations and enforcement actions on licensed firms. In January, the department reached a $100 million settlement with Coinbase over allegations of violating anti-money-laundering laws. Last August, the department imposed a $30 million fine on the cryptocurrency trading unit of Robinhood Markets Inc. for alleged violations of anti-money-laundering and cybersecurity regulations.
Ms. James’s office has filed lawsuits against several crypto platforms, including KuCoin and CoinEx, for failing to register as securities and commodities broker-dealers. The proposed legislation is the latest action taken by the attorney general to regulate the crypto market and would be submitted to the New York State Senate and Assembly for consideration during the 2023 legislative session.
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