New York lawmakers are considering new regulations for the cryptocurrency industry, proposed by Attorney General Letitia James. The aim is to bring more oversight and similarity to Wall Street, building on the existing compliance framework under the New York State Department of Financial Services (DFS), which has regulated crypto firms with its BitLicense regime since 2015.
The proposed legislation seeks to strengthen the DFS’s authority and introduce rules focusing on conflicts of interest, transparency and investor protection. The Office of the New York State Attorney General (OAG) claims the multi-billion-dollar industry lacks strong regulation and that the proposal presents the “strongest and most comprehensive set of regulations on cryptocurrency in the nation.” However, critics, like General Counsel at Hashflow Rahsan Boykin, argue that state-by-state regulation could be counterproductive and instead prompt for a national regulatory structure.
One of the main focuses of the bill is to prevent conflicts of interest among market participants. It proposes rules that prevent individuals from simultaneously being token issuers, marketplaces, and brokers, forcing them to commit to one role. Although these rules may seem reasonable, Head of Compliance at Zeebu and Valuit Timothy Cradle argues that they might not effectively protect consumers. He explains that he supports the requirements but doubts their genuine ability to safeguard consumers.
In addition to preventing conflicts of interest, the bill introduces new rules regarding stablecoins. It prohibits the use of the term “stablecoin” for digital assets not fully backed by US dollars or high-quality, easily convertible assets. While the concept appears interesting, Cradle questions its effectiveness in protecting consumers, as creative crypto marketers might come up with alternative terms like “dollar coin.”
Regardless of differing opinions, the OAG plans to submit the Crypto Regulation, Protection, Transparency, and Oversight Act (CRPTO Act) for consideration during the 2023 legislative session, which ends on June 8. As the industry continues to grow, the need for consistent regulation becomes increasingly important. Although the proposed regulations may not address every issue, they represent a step towards greater transparency and accountability in the cryptocurrency domain. However, the ultimate goal should be the establishment of a national regulatory framework that ensures uniform industry regulation.
Source: Decrypt
