New York Attorney General Letitia James has taken a leading role in calling on Congress to enact federal legislation. She has long advocated for a robust regulatory framework for the nascent cryptocurrency industry. In a letter sent to congressional leaders on April 10, James called for new, uniform standards for crypto companies doing business in the United States. In addition, Klobuchar highlighted the need for improved registration requirements and required proactive fraud detection and prevention measures. James argued that regulatory clarity is now critical, especially given the recent shift in the federal enforcement posture regarding digital assets.
Addressing Crypto Fraud and Investor Protection
James asserted that stronger federal oversight would reduce financial losses, enhance investor protections, stabilize financial markets, and strengthen national security. Crypto-related scams account for a significant portion of financial fraud, with these scams comprising 10% of all reported fraud. They represent 50% of the total dollar losses from these fraud schemes. In 2024 alone, that adds up to an estimated $12 billion in losses.
The NYAG’s efforts were a direct response to these troubling developments. They further produced a comprehensive list of statutory requirements to maximize transparency within the crypto markets. James emphasized that uniform federal legislation is essential to prevent market abuses and promote accountability within the rapidly evolving digital asset space.
Proposed Legislative Measures
In her letter, James called for a number of important provisions to be included in any congressional action. She also recommended requiring issuers of new legislation to be domiciled in the U.S. On top of this, she recommended that these issuers held reserves only in US dollars or treasuries. This measure is all about shoring up and calming the stablecoin market. These digital currencies have become superstars in the burgeoning crypto market.
James pushed for limiting crypto transactions to platforms that are anti-money laundering (AML) compliant. She also proposed prohibiting crypto transactions in retirement accounts. Furthermore, this action would insulate the most vulnerable from future losses resulting from the breakneck and exceedingly unstable world of digital assets.
The Need for Uniform Federal Standards
James also emphasized the need for uniform federal standards to cut through the chaos caused by the decentralized nature of cryptocurrency. Without a clear and consistent regulatory framework, crypto companies can exploit loopholes and engage in illicit activities, harming investors and undermining the integrity of the financial system. The US Department of Justice just revamped their crypto fraud enforcement efforts, which is even more of a sign that this sector requires serious regulation.
