New York State Attorney General Letitia James has proposed legislation to regulate the cryptocurrency industry.
The Crypto Regulation, Protection, Transparency and Oversight (CRPTO) Act would stop conflicts of interest, require public reporting of financial statements and bolster investor protections, the New York State Office of the Attorney General (OAG) said in a Friday (May 5) press release.
The program bill will be submitted by the OAG to the New York State Senate and Assembly to be considered during the 2023 legislative session, according to the release.
“Rampant fraud and dysfunction have become the hallmarks of cryptocurrency, and it is time to bring law and order to the multibillion-dollar industry,” James said in the release. “New York investors should have the peace of mind that there are safeguards in place to protect them and their money.”
The bill would prevent common ownership of crypto issuers, marketplaces, brokers and investment advisers and would take other measures to stop conflicts of interest, according to the release.
It would also require crypto companies to undergo independent auditing, publish audited financial statements and take other measures to increase transparency, the release said.
To bolster investor protections, the bill would enact and codify know your customer (KYC) provisions, regulate the use of the term “stablecoin” and require platforms to reimburse customers who are victims of fraud, per the release.
“All investments are regulated to account for every penny of investors’ money — cryptocurrency should be no exception,” James said in the release. “These commonsense regulations will bring more transparency and oversight to the industry and strengthen our ability to crack down on those that don’t pay respect to the law.”
As PYMNTS reported in March, James alleged March 9 that the popular cryptocurrency ether is a security in a lawsuit filed against KuCoin, one of the largest crypto exchanges by transaction volume.
The filing by James represents the first time a regulator has claimed in court that ether, which has long been treated as a commodity by state and federal regulators, is a security.
According to the lawsuit, the New York Attorney General also believes the luna token and the terraUSD stablecoins are securities.
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