New York State Attorney General Letitia James has proposed a groundbreaking legislation to impose tighter regulations on the cryptocurrency industry due to rampant fraud. Dubbed as “Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act”, it aims to create the strongest and most comprehensive set of regulations on cryptocurrency in the United States. The bill would require independent public audits of cryptocurrency exchanges and bolster investor protections with “know-your-customer” (KYC) provisions. It also seeks to achieve transparency by preventing individuals from owning the same companies, such as brokerages and tokens, to stop conflicts of interest.

The new legislation includes measures to ensure consumer protection with provisions similar to those of the federal Electronic Fund Transfer Act. Crypto platforms would be obliged to reimburse customers who are victims of fraud and thus, strengthen the New York State Department of Financial Services’ (DFS) regulation authority of digital assets. Furthermore, the bill would ban the use of the term ‘stablecoin’ to describe or market digital assets unless they are backed 1:1 with U.S. currency or high-quality liquid assets as defined in federal regulations.

In relation to enforcement, the Attorney General would be granted authority to issue subpoenas and impose civil penalties of $10,000 per violation per individual or $100,000 per violation per firm. The bill also handed authority to the DFS to license digital asset brokers, investment advisors and issuers before engaging in business in New York.

Attorney General James has characterized cryptocurrency as the trading of fraud and dysfunction, for which the new legislation seeks to impose law and order. She expressed that the regulations would bring transparency and greater oversight to the industry and discourage fraud.



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