New York Attorney General (NYAG) Letitia James sent a letter to congressional leaders on April 10 urging the passage of federal legislation to establish a regulatory framework for crypto.
The letter argued that the lack of national rules increases the risk of financial fraud, criminal abuse, and market instability in the digital asset sector.
Attorney General James stated that crypto-related scams account for 10% of all financial fraud incidents and 50% of the total dollar losses from fraud cases.
She cited an estimated $12 billion in losses to crypto fraud in 2024 alone. In her letter, James asserted that stronger federal oversight would reduce those losses and enhance investor protections, stabilize financial markets, and strengthen national security.
Additionally, the letter highlighted that the absence of federal regulation enables price manipulation and opaque practices within crypto markets.
James called for legislation that would impose uniform standards on crypto companies operating in the US, including registration requirements and mandatory efforts to identify and mitigate fraud.
She noted that due to their pseudonymous nature, digital assets are increasingly used to facilitate criminal operations and, in some cases, finance adversarial regimes.
Oversight of stablecoins, platforms, and retirement accounts
The letter proposed several provisions, including legislation requiring stablecoin issuers to be based in the US and maintain reserves in US dollars or treasuries. Under the proposed framework, these issuers and other intermediaries would also be subject to registration and compliance obligations.
James further recommended restricting crypto dealings to anti-money laundering (AML) compliant platforms and barring the inclusion of digital assets in retirement accounts.
The NYAG also compiled a list of statutory requirements that would allegedly create broader transparency in crypto markets. These include protections against conflicts of interest, increased price disclosure, and regulatory accountability for all intermediaries.
She wrote that such standards are necessary to protect retail investors from opaque and fraudulent business practices that continue to evolve without comprehensive oversight.
The letter follows the US Department of Justice’s recent restructuring of crypto fraud enforcement initiatives. James argued that regulatory clarity is now critical given this shift in federal enforcement posture.
She added that the burden of enforcement cannot fall solely on state regulators, especially as digital assets become increasingly embedded in financial systems.
The letter reiterated James’ position that uniform federal legislation is essential to prevent market abuses and promote accountability. She maintained that clear federal rules could help eliminate loopholes that allow fraudulent activity to persist across jurisdictions.
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