The world of cryptocurrency has been hit by a new bill proposed by New York Attorney General Letitia James. The Crypto Regulation, Protection, Transparency and Oversight Act proposes one of the most comprehensive sets of regulations on cryptocurrency in the US, with the aim of ending the "fraud and dysfunction" that has plagued the industry. The bill has been designed to increase transparency and accountability, and to eliminate conflicts of interest. If the bill becomes law, crypto exchanges could be required to reimburse victims of fraud.
The crypto industry has been dogged by fraud and corruption, and the lack of regulation has made it a prime target for criminals. James has been at the forefront of modelling cryptocurrency regulations, and other states, such as California and Illinois, are considering adopting similar laws. The bill is aimed at increasing transparency in the industry by requiring companies to undergo mandatory independent auditing and publish audited financial statements. It will also require marketplaces to establish and publish listing standards, and require cryptocurrency promoters to register and report their interest in any issuer whose crypto assets they promote.
James claims that her legislation will increase transparency, eliminate conflicts of interest, and impose common-sense measures to protect investors, consistent with regulations imposed on other financial services. The bill also aims to prevent citizens from being financially exploited, especially those from marginalized communities. With communities of color increasingly drawn to investing in crypto, it's essential that common-sense protections are introduced to prevent them from facing higher financial risks, said New York Assembly member Michaelle Solages.
Many lawmakers agree that tough oversight is needed to regulate the fast-growing industry. New York City Council Member Jennifer Gutiérrez said that "transparency and proper oversight" of cryptocurrency is needed to prevent citizens from being financially exploited.
Crypto fraud is a burgeoning white-collar crime problem in the US and elsewhere, with cases increasingly becoming the focus for many state and federal prosecutors. In February, the founder of a Las Vegas-based cryptocurrency and virtual payment company who authorities say cheated dozens of investors out of about $7.5 million was sentenced to more than eight years in prison. Prosecutors say he used the proceeds to buy a house, cars, jewelry and other luxuries. In December, federal prosecutors charged Samuel Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes, alleging he intentionally deceived customers and investors to enrich himself and others, while playing a central role in the company’s multibillion-dollar collapse.
The lack of robust regulations in the multi-billion-dollar industry has made it prone to dramatic market fluctuations, and it has been used to hide and facilitate criminal conduct and fraud. James' legislation aims to tackle these problems head-on by introducing a range of measures to protect investors and increase transparency.
Overall, the proposed Crypto Regulation, Protection, Transparency and Oversight Act is a significant development in the regulation of the crypto industry. If passed, it will provide much-needed protection for investors and help to eliminate fraud and dysfunction. With more and more states considering adopting similar laws, it seems that tough oversight of the crypto industry is on the horizon.