New York Attorney General Letitia James is calling on congressional leaders to pass federal legislation that would establish a regulatory framework for the cryptocurrency industry. In a letter sent on April 10, James highlighted the risks of financial fraud, criminal abuse, and market instability caused by the lack of national rules governing digital assets.
According to James, crypto-related scams make up 10% of all financial fraud incidents and account for 50% of the total dollar losses from fraud cases. In 2024 alone, an estimated $12 billion was lost to crypto fraud. James believes that stronger federal oversight is necessary to reduce these losses, enhance investor protections, stabilize financial markets, and strengthen national security.
One of the key issues James raised in her letter is the absence of federal regulation, which allows for price manipulation and opaque practices within crypto markets. She called for legislation that would impose uniform standards on crypto companies operating in the US, including registration requirements and efforts to identify and mitigate fraud.
James also proposed provisions that would require stablecoin issuers to be based in the US and maintain reserves in US dollars or treasuries. Additionally, she recommended restricting crypto dealings to anti-money laundering compliant platforms and preventing the inclusion of digital assets in retirement accounts.
The NYAG outlined a list of statutory requirements aimed at creating greater transparency in crypto markets, such as protections against conflicts of interest, increased price disclosure, and regulatory accountability for all intermediaries. James emphasized the need for these standards to protect retail investors from fraudulent practices that continue to evolve without comprehensive oversight.
The letter comes in response to the US Department of Justice’s recent restructuring of crypto fraud enforcement initiatives. James stressed the importance of regulatory clarity, stating that state regulators should not bear the burden of enforcement alone as digital assets become more integrated into financial systems.
In conclusion, James reiterated the importance of uniform federal legislation to prevent market abuses and promote accountability in the crypto industry. She believes that clear federal rules could help eliminate loopholes that allow fraudulent activity to persist across jurisdictions.