New York Attorney General Letitia James has warned that a proposed federal crypto market structure bill would restrict the ability of state regulators to pursue fraud, urging Congress to impose stronger consumer protections on digital asset platforms. In written testimony submitted Monday to the Senate Permanent Subcommittee on Investigations, James said the Digital Asset Market Clarity Act would override state regulation of digital asset markets and shift oversight to the Commodity Futures Trading Commission.
Increase in crypto scam complaints received by the New York Attorney General's office over the past three years.
James argued that the Clarity Act would 'dilute' states' ability to enforce laws against fraud and undermine local enforcement. Her office has seen complaints about crypto scams triple over the past three years, with reported losses totaling nearly $500 million over five years.
James called for crypto platforms to comply with anti-money laundering, know-your-customer, and cybersecurity requirements, and to conduct surveillance for suspicious activity and market manipulation. She also urged Congress to make platforms financially liable when they fail to protect customers from fraud, to prohibit conversion of untraceable crypto into US dollars, and to preserve existing state money transmission, commodities, and securities laws.
Additionally, James proposed barring elected officials and recent government officials from regulating crypto when they may have financial interests in the industry.