New York’s Attorney General Letitia James sent a letter to key congressional figures on April 10 advocating for federal legislation to create a regulatory framework for cryptocurrency.
In her letter, she emphasized that the absence of national regulations raises the likelihood of financial fraud, criminal misuse, and instability within the digital asset landscape.
According to Attorney General James, scams related to cryptocurrency represent 10% of all financial fraud cases and account for 50% of the overall monetary losses experienced in fraud incidents.
She estimated that losses due to crypto fraud reached approximately $12 billion in 2024. James asserted that enhanced federal regulation could mitigate these losses, improve investor protections, stabilize financial markets, and bolster national security.
Her letter also pointed out that the lack of federal oversight permits price manipulation and obscure practices within crypto markets.
James advocated for legislation that would establish consistent standards for crypto firms operating in the United States, including requirements for registration and mandatory fraud detection and prevention measures.
She expressed concern that the pseudonymous nature of digital assets increasingly facilitates criminal activities and, in some instances, supports adversarial governments.
Regulation of Stablecoins, Platforms, and Retirement Accounts
The letter outlined several proposals, such as legislation mandating that stablecoin issuers operate from within the US and maintain reserves in US dollars or treasury securities. This proposed framework would also impose registration and compliance responsibilities on these issuers and other intermediaries.
James additionally suggested that transactions involving crypto should only occur on platforms that comply with anti-money laundering (AML) regulations and recommended prohibiting the inclusion of digital assets in retirement plans.
The Attorney General put together a list of legislative requirements aimed at fostering greater transparency within crypto markets. These would include safeguards against conflicts of interest, enhanced price disclosure, and regulatory accountability for all intermediaries.
She stated that such standards are crucial for safeguarding retail investors from deceptive and fraudulent practices that are continually evolving in the absence of comprehensive oversight.
This letter comes in the wake of the recent overhaul of crypto fraud enforcement strategies by the US Department of Justice. James noted that regulatory clarity is especially important considering this change in the federal enforcement approach.
She remarked that the responsibility for enforcement cannot be shouldered solely by state authorities, particularly as digital assets become more embedded in financial structures.
The letter reiterated her belief that consistent federal legislation is necessary to deter market abuses and ensure accountability. She asserted that well-defined federal regulations could help close loopholes that permit fraudulent activity to thrive across different jurisdictions.