New York Attorney General Letitia James proposes the Crypto Regulation, Protection, Transparency and Oversight Act (CRPTO) to strengthen her office’s regulatory power over the burgeoning cryptocurrency industry.
If passed, the bill would extend the attorney general’s enforcement authority over cryptocurrency firms operating in the state. The bill would also consolidate the New York State Department of Financial Services’ (NYDFS) authority to license industry participants and oversee the state’s digital asset licensing regime. The CRPTO will be submitted for consideration to the New York State Senate and Assembly during the 2023 legislative session, which runs until June 8.
The attorney general seeks jurisdiction to enforce crypto firms’ law violations, issue subpoenas, and impose civil penalties of $10,000 per violation for each individual or $100,000 per violation for each crypto firm. The attorney general also aims to shut down businesses engaging in alleged fraud and illegality.
Consumer protection and industry restrictions
The proposed bill seeks to protect consumers by requiring crypto exchanges to have independent public audits of their financial statements and reimburse defrauded customers. It also aims to limit conflicts of interest, such as individuals issuing tokens while owning marketplaces where tokens are traded. The bill would require crypto firms to implement know-your-customer procedures and prohibit using the term “stablecoin” to market virtual currencies unless their values maintain a one-to-one ratio with the dollar.
Superintendent Adrienne Harris of the NYDFS, which supervises over 30 crypto companies, defended the department’s efforts in virtual currency regulation, stating that it prioritizes consumer and market protection while maintaining New York’s position as a global financial center.
The proposed legislation is the latest in a series of actions taken by Attorney General James to address the crypto market. Her office has filed suits against various crypto platforms and has consistently warned consumers about the risks involved in crypto investments and the legal obligations of brokers and dealers dealing with digital assets.