Several New York lawmakers have thrown their weight behind New York’s new Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act.
On May 5, New York Attorney General Letitia James revealed a proposed bill that would further extend the scope of regulatory authority over crypto firms.
What is the CRPTO Act?
According to James, the landmark legislation will “tighten regulations on crypto industry to protect investors, consumers, and the broader economy.”
The regulatory chief tweeted that her office proposes common-sense measures to end fraud and dysfunction in the crypto space.
She noted that fraud in the cryptocurrency industry has led to the loss of billions for investors, with the greater impact felt by low-income investors and people of color.
“Banks and other financial services are regulated. The cryptocurrency industry must be too,” she said.
The proposed legislation requires crypto firms to refund customers defrauded on their platform and forces crypto companies to undergo public and independent auditing.
Additionally, the bill will prevent crypto firms from lending and borrowing users’ assets, give investors all information about risk and conflict of interest about crypto companies, and prevent the owners of crypto platforms from also creating crypto tokens.
Another key feature of the bill is that it would extend the powers of the office of the Attorney General to shut down companies that violate the proposed laws. The New York State Department of Financial Services will also get additional powers to regulate digital assets.
Under James, New York’s Office of the Attorney General has filed several enforcement actions against crypto firms like KuCoin and individuals like the founder of bankrupt Celsius, Alex Mashinsky.
Lawmakers throw weight behind the bill
Meanwhile, the bill has already received support from several state senators and assembly members.
The Deputy Majority leader of the New York assembly Michaelle Solages said:
“With communities of color increasingly drawn to investing in crypto, it’s essential that we introduce common-sense protections to prevent them from facing higher financial risks.”
State Senator Cordell Cleare commended New York’s Attorney General for the bill. Cleare added:
“All financial products and instruments must be honest, transparent, and failsafe — this goes double for emerging industries.”
New York lawmakers might be open to passing the bill, considering the same legislature passed a 2-year moratorium on Bitcoin (BTC) mining activities within the state.
Meanwhile, some believe the lawmakers might not pass the bill. A K&L Gates law firm partner, Andrew Hinkes, said the bill will fail “because it relies on certain assumptions about crypto that are simply not true.”
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Author: Oluwapelumi Adejumo