There could be tougher crypto regulation in New York over the coming months, thanks to a proposal by the State’s Attorney General Letitia James. New York is already known for having a clear crypto regulatory framework established by the New York State Department of Financial Services (DFS) in 2015.
In a press release, the Office of the Attorney General stated that the latest proposal seeks to give DFS more powers. The proposed rules in James’ bill focus on transparency, investor protections, and conflicts of interest. As per the Attorney General, the proposal will help create the most extensive set of rules on crypto in the United States.
The proposed regulations come amid an escalated scrutiny of the crypto industry by the US authorities following a series of bankruptcies. The New York Attorney General condemns the conduct of some crypto players like the collapsed blockchain company Terraform Labs, which left several investors in losses. She adds that such behavior would be prohibited once the new rules get approved.
James is expected to submit her proposal titled the Crypto Regulation, Protection, Transparency, and Oversight Act (CRPTO Act) to New York policymakers during this year’s legislative session that ends early next month.
Boykin Take on New York Attorney General’s Proposal
Rahsan Boykin, the General Counsel at Hashflow, says James’ bill advocates for rules already implemented in traditional finance (TradFi). He described the proposal as a positive move that could push for accountability and transparency in the crypto space.
Boykin, however, says State-by-State rules may somewhat prove counterproductive because some crypto firms may relocate from States with strict policies to those that are friendly, creating an uneven playground for companies that stay.
For this reason, Boykin notes that while New York’s proposal is exceptional, there is a need for a national regulatory framework to ensure that the US crypto industry is regulated in a more consistent manner.
What James Aims to Achieve With Her Proposal
Most of the proposed rules in James’ bill address conflicts of interest. For example, they restrict token creators from owning crypto brokers and exchanges. In addition, the CRPTO bill contains policies that ban the use of the word ‘stablecoin’ to describe cryptocurrencies that are not fully backed by stable assets like USD.
Furthermore, James has included public disclosure requirements in her proposal. She argues that if bankrupt crypto lender Celsius had made public its financial statements, then its investors could’ve been aware of the firm’s financial health and acted accordingly.
Meanwhile, Timothy Cradle, the Head of Compliance at Zeebu and Valuit, challenges James’ argument, claiming that Celsius had availed its audited financial statements through the United Kingdom’s House of Companies months before the firm filed for bankruptcy.
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