New York Attorney General Letitia James sent a letter to congressional leaders urging them to pass federal legislation to strengthen regulations on cryptocurrencies and digital assets.
In her letter, Attorney General James warns that the lack of strong federal regulations on cryptocurrencies increases the risk of fraud, criminal activity, and financial instability. Attorney General James argues that federal regulations would bolster America’s national security, strengthen its financial markets, and protect investors from cryptocurrency scams, which now account for 10 percent of all financial fraud and 50 percent of all losses from financial fraud. To better protect cryptocurrency investors, Attorney General James urges Congress to pass legislation that would require cryptocurrency companies to make a series of commitments, including registering with a regulatory body and actively identifying and preventing fraud and scams. This letter comes after the U.S. Department of Justice announced the dismantling of federal criminal cryptocurrency fraud enforcement, making a robust regulatory framework all the more critical.
“Countless New Yorkers invest in cryptocurrency and digital assets, and more must be done to protect them and their money,” said Attorney General James. “Thousands of investors in New York and across the country have lost millions of dollars to cryptocurrency scams and fraud that could be prevented with stronger federal regulations. I am urging Congress to pass legislation that would strengthen federal regulations on the cryptocurrency industry to protect investors, strengthen financial markets, and stop fraud.”
In her letter, Attorney General James writes that federal regulation of cryptocurrencies is needed to protect investors from price manipulation and rigged markets, prevent fraud that drains billions of dollars from hard-working Americans, and strengthen America’s national security, as digital assets may be used to anonymously finance criminal operations and fund adversarial regimes. Cryptocurrency frauds have skyrocketed as their use has grown more widespread, costing Americans an estimated $12 billion in 2024.
To address the risks associated with some cryptocurrencies, Attorney General James asks Congress to pass legislation that would:
- Require issuers of stablecoins, a type of cryptocurrency that is typically pegged to a currency for the purpose of maintaining a stable value, to have a presence in the U.S. and be subject to regulation;
- Require backing stablecoins with U.S. dollars or treasuries;
- Require platforms to only conduct business with anti-money laundering compliant platforms;
- Require issuers and intermediaries to register to ensure accountability, transparency, and basic protections to the public;
- Protect against conflicts of interest;
- Promote price transparency;
- Require platforms and intermediaries to actively identify and prevent fraud and scams; and
- Disallow digital assets in retirement accounts.
Attorney General James writes that with stronger federal regulations on cryptocurrencies, Congress can protect financial markets, investors, and the U.S. economy.
