A new bill proposed by New York Attorney General Leticia James would give her state a basic framework for crypto regulation. Among the provisions in the bill are exchanges being required to reimburse customers if they are the victims of fraud or theft.
Leticia James Seeks to Introduce Basic Regulation
New York and Leticia James have long held strong anti-crypto attitudes. Not long ago, the attorney general sued several digital currency companies including Ku Coin and Coin Ex, alleging both had taken part in various forms of fraud.
In addition, the state of New York has recently instituted a two-year crypto moratorium to ensure that no new digital currency mining companies can set up shop in the Empire State for the next 24 months. The goal is to make it so that all crypto companies run purely on clean energy and obey present environmental standards. Regarding her recent bill, James stated:
We’re proposing common sense measures to protect investors and end the fraud and dysfunction that have become the hallmarks of cryptocurrency.
Other provisions laid out in the bill include customers being informed of conflicts of interest amongst crypto companies. Also, they would be educated on various risks regarding their investments and the platforms they choose to work with. Lastly, crypto companies would not be permitted to borrow or lend customer assets, clearly a nod to the FTX debacle in which customer funds were utilized to pay off loans and invest in luxury Bahamian real estate.
While the items laid out in the bill sound glorious, it would be a mistake to rush forward on the idea that it’s all lollipops and rainbows from here on out, the biggest reason being that James, as mentioned above, has not always liked crypto or held the most positive attitude towards it. Thus, crypto fans need to remain wary.
This is an idea held by many crypto analysts and legal experts including Andrew Hinkes, a partner at law firm K&L Gates. In a recent tweet, Hinkes mentioned that the bill was “destined to fail” in the New York Congress given that it’s written by someone (James) who doesn’t understand crypto.
He explained that the provisions in the bill are virtually impossible to apply to decentralized organizations. He also mentioned that the market, as it stands, cannot provide the kinds of auditing and insurance that James would like to see initiated.
Being Looked at Carefully
Right now, the bill is in document form and being observed by New York regulators. They must give the “OK” on the bill for it to become law.
Since the fall of FTX seven months ago, crypto regulation appears to be on the minds of virtually every politician. The company accounted for more than $200 billion in crypto funds being wiped off the digital slate permanently.
