New York Attorney General Letitia James is calling on Congress to adopt stronger cryptocurrency regulations, warning that proposed federal legislation could weaken states’ ability to protect consumers from fraud.
In written testimony submitted to the Senate Permanent Subcommittee on Investigations, James said cryptocurrency scams cost Americans billions of dollars annually. Complaints filed with her office in New York have tripled over the past three years, while reported losses have totaled nearly $500 million over five years.
“My office has been leading the fight against cryptocurrency fraud,” James testified. “Without adequate laws and regulations, financial crises ensue.”
Congress is considering the Digital Asset Market Clarity Act, which would place oversight of digital assets under the Commodity Futures Trading Commission. James argues the legislation would override state regulations and restrict enforcement by state and local authorities.
James said the measure could hamper her office’s efforts to investigate cryptocurrency companies, recover money for investors and hold platforms accountable for violating state law.
The attorney general is urging Congress to require cryptocurrency platforms to comply with anti-money laundering, customer identification and cybersecurity rules. Her recommendations also include:
- Requiring platforms to monitor transactions for fraud and market manipulation.
- Preventing untraceable cryptocurrency from being converted into U.S. dollars.
- Keeping digital assets subject to existing securities, commodities and money-transmission laws.
- Holding cryptocurrency companies financially responsible when they fail to protect customers from scams.
- Blocking noncompliant companies, institutions and countries from participating in cryptocurrency markets.
James also raised concerns that anonymous cryptocurrency transactions could conceal bribery, campaign finance violations, conflicts of interest and prohibited financial gifts from foreign interests. She called for restrictions preventing elected officials and recent government employees with cryptocurrency interests from participating in the industry’s regulation.
The Attorney General’s Office has pursued several major cryptocurrency cases. It reached settlements with Coin Café, Gemini, Genesis and KuCoin and brought a 2021 enforcement action against stablecoin issuer Tether.
In April, James secured more than $5 million from cryptocurrency platform Uphold for promoting what her office described as a fraudulent investment scheme. Her office has also taken action against scams targeting Russian-speaking New Yorkers and sued NovaTechFx in 2024 over an alleged billion-dollar pyramid scheme that affected more than 11,000 state residents.
