Summary:
- New York Attorney General Letitia James is pushing to empower the State’s Department of Financial Services with the authority to implement stricter crypto rules.
- AG James’s proposed regulations would compel crypto firms to reimburse fraud victims and bar crypto asset creators from running digital asset platforms.
- The bill marks another crypto crackdown from the New York AG’s office after lawsuits against CoinEx, Kucoin, and former Celsius CEO Alex Mashinsky.
The office of the New York Attorney General is attempting to rein in the crypto industry with a bill meant to introduce stricter crypto rules and improve oversight capacity from the state’s Department of Financial Services (NYDFS).
Under the bill proposed by New York AG Letitia James, exchanges must reimburse users who fall victim to fraud. The so-called “nation-leading” crypto rules also ban developers of cryptocurrencies from operating digital asset exchanges and businesses. AG James argued that these crypto rules could mitigate conflicts of interest.
Crypto companies would also undergo independent and public auditing to strengthen trust and ensure compliance. The bill would also criminalize lending out customers’ digital assets.
We’re proposing commonsense measures to protect investors and end the fraud and dysfunction that have become the hallmarks of cryptocurrency. Banks and other financial services are regulated. The cryptocurrency industry must be too.
To achieve this, AG James’ bill would beef up regulatory authority commanded by New York’s Department of Financial Services. The NYDFS already launched a series of enforcement actions against crypto players in the State of New York.
Crypto Rules Proposed After New York Crypto Crackdown
New York’s DFS and AG James have gone after crypto businesses for alleged regulatory violations in recent months. In a lawsuit against crypto exchange Kucoin, the regulator argued that crypto’s largest altcoin Ether (ETH) meets securities requirements and should be regulated.
AG James also sued CoinEx and Alex Mashinsky, the former CEO of Celsius. New York is one of several states cracking down on crypto businesses across the U.S. The state’s financial regulator struck at Binance-branded stablecoin BUSD and its issuer Paxos.
In Illinois, Coinbase was accused of violating Biometric privacy laws as watchdogs chase crypto entities toward off-shore jurisdictions.
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