New York Attorney General Letitia James has called on Congress to impose stronger regulations on the cryptocurrency market, arguing in written testimony to a Senate subcommittee that the industry costs Americans billions of dollars in scams each year.
Her testimony was delivered to the Senate Committee on Homeland Security and Governmental Affairs’ Permanent Subcommittee on Investigations.
Opposition to the Clarity Act
James focused much of her testimony on the Digital Asset Market Clarity Act, which would hand oversight of digital assets to the Commodity Futures Trading Commission and override state regulation.
She warned this would severely limit the ability of state and local law enforcement to protect residents from fraud.
James said:
“My office has been leading the fight against cryptocurrency fraud. Our rules-based market system gives people confidence that they can do business here. Without adequate laws and regulations, financial crises ensue.”
Scam losses climb
Complaints to her office about cryptocurrency scams have tripled over the past three years.
Over the last five years, reported scam losses to the office totaled nearly half a billion dollars, with billions more lost through the bankruptcies of various companies.
The office previously brought the first and only enforcement action against stablecoin issuer Tether in 2021, and has secured settlements from brokers including Coin Café, Gemini, Genesis, and KuCoin.
Proposed reforms
James urged Congress to require anti-money laundering and know-your-customer compliance, ban untraceable coins routed through mixers from being converted to dollars, and hold platforms financially liable for failing to protect users.
She also called for barring current and recent government officials from regulating an industry they may profit from, citing concerns over the Constitution’s emoluments clause.
