Several New York legislators have backed the new of New York Crypto Regulation, Protection, Transparency and Supervision (CRPTO) AcT.
On May 5, New York Attorney General Letitia James unveiled a bill that would further expand the scope of regulatory authority over crypto companies.
What is the CRPTO Act?
According to James, the groundbreaking legislation will “tighten the rules for the crypto industry to protect investors, consumers and the wider economy.”
The regulatory chief tweeted that her office is proposing sensible measures to end fraud and dysfunction in the crypto space.
She noted that fraud in the cryptocurrency industry has led to the loss of billions for investors, with a greater impact on low-income investors and people of color.
“Banks and other financial services are regulated. So should the cryptocurrency industry be,” she said.
The proposed legislation would require crypto companies to refund customers cheated on their platform and force crypto companies to undergo public and independent audits.
In addition, the bill will prevent crypto companies from lending and borrowing assets from users, provide investors with full information about risks and conflicts of interest about crypto companies, and prevent crypto platform owners from also creating crypto tokens.
Another key feature of the bill is that it would expand the powers of the attorney general’s office to shut down companies that violate the proposed laws. The New York State Department of Financial Services will also be given additional powers to regulate digital assets.
Under James, the New York Attorney General’s office has launched several enforcement actions against crypto companies like KuCoin and individuals like bankrupt Celsius founder Alex Mashinsky.
Lawmakers are throwing weight behind the bill
Meanwhile, the bill has already received support from several senators and members of the assembly.
The Deputy Majority Leader of the New York Assembly, Michaelle Solages, said:
“As communities of color become increasingly drawn to investing in crypto, it is essential that we introduce sensible safeguards to prevent them from facing greater financial risks.”
State Senator Cordell Cleare praised the New York Attorney General for the bill. Clear added:
“All financial products and instruments must be fair, transparent and fail-safe – this goes doubly for emerging industries.”
New York lawmakers could be open to passing the bill, as the same legislature passed a two-year moratorium on Bitcoin (BTC) mining activities in the state.
Meanwhile, some believe lawmakers may not pass the bill. Andrew Hinkes, partner of a law firm of K&L Gates, said the bill will fail “because it rests on certain assumptions about crypto that are simply not true.”