Crypto Sheriff

Crypto Sheriff
​

​New York Attorney General Letitia James proposed a bill that would, quoting the AG’s office, “…tighten regulations on the cryptocurrency industry to protect investors, consumers, and the broader economy.” The bill, which proposes “…the strongest and most comprehensive set of regulations on cryptocurrency in the nation, would increase transparency, eliminate conflicts of interest, and impose commonsense measures to protect investors, consistent with regulations imposed on other financial services.”
Some of the key bill points are:

• Industry companies must undergo Independent public audits, publish same, and provide investors with material information about issuers, including risks & conflicts-of-interest.
• Require cryptocurrency promoters to register and report their interest in any issuer whose cryptocurrency the promote.
• Digital asset brokers, marketplaces, investment advisors, and issuers would have to be licensed in New York before engaging in business.
• Cryptocurrency platforms would be required to reimburse customers who are victims of fraud or unauthorized asset transfer.
• Prohibit common ownership of crypto issuers, marketplaces, brokers, and investment advisers by preventing any participant from engaging in more than one of those activities.
• Prohibit crypto brokers and marketplaces from trading for their own accounts.
• Prohibiting marketplace investment advisers from keeping custody of customer funds
• Prohibiting brokers from borrowing or lending customer assets
• Ban the use of the term ‘stablecoin’ unless they are backed by US currency or high-quality liquid assets as defined in federal regulations.
• Prohibiting referrals from marketplaces to investment services for compensation
• The Ag would have the right to enforce violations with civil penalties of $10,000 per individual/violation or $100,000 per firm, including damages, restitution, penalties or to shut down businesses.

The bill will likely get modified (currently in draft form) as politician wrangle over the details, but almost all of the above (there are more) items are relatively simple, commonsense regulations that other asset classes already follow.  After the FTX and other crypto debacles, other than a bias against all government regulation, it is hard to come up with reasons to not regulate the cryptocurrency space, and while the attraction for some might have been the unregulated ‘wild west’ concept, hopefully there is a new sheriff in town, at least in NY.