NY AG James Warns Federal Crypto Bill Could Weaken State Oversight

New York Attorney General Letitia James warned Congress that proposed federal cryptocurrency legislation could weaken state oversight. In testimony submitted to a Senate investigative panel, James argued the Digital Asset Market Clarity Act would pre-empt state regulation by shifting responsibility to the Commodity Futures Trading Commission. James noted complaints about cryptocurrency scams received by her office have tripled in the past three years, while reported losses over the previous five years totalled almost US$500 million.

James Reports Tripled Cryptocurrency Scam Complaints and US$500 Million in Losses

James said complaints about cryptocurrency scams received by her office have tripled in the past three years. Reported losses over the previous five years totalled almost US$500 million (AU$725 million). James added investors also lost billions through cryptocurrency company collapses. She argued state and local agencies carry out much of the country's law enforcement work and should retain their authority.

James Calls for Mandatory AML Standards and Customer Compensation Requirements

James called for mandatory anti-money laundering, know-your-customer and cybersecurity standards, as well as surveillance systems capable of detecting market manipulation and suspicious transactions. She urged lawmakers to require cryptocurrency companies and intermediaries to compensate customers when they fail to prevent fraud. James also called for preventing untraceable cryptocurrency, including assets linked to mixers, from being exchanged for US dollars. She argued existing state money transmission, commodities and securities laws should continue to apply to cryptocurrency, while elected officials and recent public office holders should be barred from regulating the industry where they may benefit financially.

FAQ

What did New York Attorney General Letitia James warn Congress about? James warned that proposed federal cryptocurrency legislation could weaken state oversight, making it more difficult for regulators to pursue scams and hold digital asset platforms accountable.

How much have cryptocurrency scam losses totalled according to James? James said reported losses over the previous five years totalled almost US$500 million (AU$725 million), while complaints about cryptocurrency scams received by her office have tripled in the past three years.

What regulatory measures did James recommend? James called for mandatory anti-money laundering, know-your-customer and cybersecurity standards, surveillance systems to detect market manipulation, and requirements for cryptocurrency companies to compensate customers when they fail to prevent fraud.