New York Attorney General Urges Federal Cryptocurrency Regulation

New York Attorney General Letitia James called on lawmakers Thursday to prioritize the creation of a federal framework for regulating cryptocurrencies, highlighting the urgent need for stronger protections for digital asset investors. In a letter addressed to key members of Congress, including Senate Majority Leader John Thune and House Speaker Mike Johnson, James emphasized the necessity for comprehensive regulations to safeguard investors from the growing risks in the cryptocurrency market.

According to Reuters, James proposed that cryptocurrency companies be required to register with a federal agency and that minimum standards be established for listing digital tokens. This regulatory overhaul, she argued, would help bring much-needed transparency and security to the rapidly evolving sector.

James’ request comes as Congress seems poised to pass a bill that would introduce new regulations for stablecoins—cryptocurrencies designed to maintain a stable value, usually pegged to the U.S. dollar. Stablecoins are widely used in the crypto market to facilitate transactions and as a means of transferring funds between different digital assets like Bitcoin and Ether. In her letter, James stressed that issuers of stablecoins should be mandated to have a U.S. presence and keep reserves, including U.S. Treasuries, in American banks to further protect consumers.

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The push for stronger regulation is gaining momentum in Washington, where the cryptocurrency industry has become a significant political force. As per Reuters, the industry spent over $119 million in the 2024 elections, supporting pro-crypto candidates. This political engagement has garnered the attention of lawmakers, with figures like former President Donald Trump advocating for broad changes to U.S. crypto policies. Bo Hines, a key advisor to Trump on digital assets, recently stated that the White House hopes to see a stablecoin bill passed before August.

In her letter, James underscored the personal stakes involved for millions of American investors, particularly in New York, where many have faced financial losses due to scams and fraud within the cryptocurrency space. “Countless New Yorkers invest in cryptocurrency and digital assets, and more must be done to protect them and their money,” James wrote. “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,” she added, stressing the importance of swift action to curb these risks.

As discussions around cryptocurrency regulation continue, James’ call for federal oversight reflects growing concerns about the industry’s impact on investors and the broader financial system.

Source: Reuters