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FameEX Hot Topics | New York Proposes 'Landmark' Crypto Law for Strongest and Most Comprehensive Regulations in US

2023-05-08 16:33:00

New York State Attorney General Letitia James has proposed the Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act, which is aimed at tightening regulations on the cryptocurrency industry in the state. The proposed legislation is expected to be the most comprehensive set of regulations on cryptocurrency in the United States. The CRPTO Act seeks to increase transparency, eliminate conflicts of interest, and bolster investor protection by imposing commonsense measures consistent with regulations imposed on other financial services.

The proposed law requires independent public audits of cryptocurrency exchanges, prevents individuals from owning the same companies to avoid conflicts of interest, and enacts know-your-customer provisions to protect investors. It would also codify the New York State Department of Financial Services’ (DFS) regulatory authority of digital assets and grant the Attorney General jurisdiction to enforce any violation of the law, issue subpoenas, impose civil penalties, collect restitution and damages, and shut down fraudulent businesses.

The CRPTO Act also bans 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.

Attorney General James emphasized the need for law and order in the multi-billion-dollar cryptocurrency industry, stating that these regulations will bring more transparency and oversight and strengthen the ability to crack down on those who do not respect the law.

The CRPTO Act is considered the strongest indication of a US state seeking to regulate cryptocurrency since the introduction of New York’s BitLicense in 2015. The BitLicense was an early and unpopular attempt to regulate the industry, which led to many cryptocurrency companies leaving New York. If the CRPTO Act becomes law, it will lead to a new regulatory environment for cryptocurrency businesses in New York, and potentially across the United States.

The proposed regulations could have implications for stablecoin issuers such as Tether, which has faced regulatory scrutiny from the New York Attorney General’s office. The office alleged that Tether and Bitfinex engaged in an $850 million fraud to cover up losses of $850 million. The proposed regulations could also have an impact on Decentralized Finance (DeFi) projects that operate in New York, which have largely operated in a regulatory gray area.

In summary, the proposed CRPTO Act is the strongest indication of a US state seeking to regulate the cryptocurrency industry. If the bill becomes law, it will bring more transparency, oversight, and accountability to the industry and protect investors and consumers. However, the proposed regulations could also impact stablecoin issuers and DeFi projects that operate in New York.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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