New York Attorney General Letitia James has proposed a new state law designed to increase oversight of the cryptocurrency industry and boost consumer protections.

James says the crypto sector lacks robust regulations, making it prone to dramatic market fluctuations and a tool to hide and facilitate criminal conduct and fraud.

The crypto regulation, protection, transparency, and oversight (CRPTO) Act would require independent public audits of cryptocurrency exchanges and prevent individuals from owning the same companies, such as brokerages and tokens, to stop conflicts of interest.

Crypto platforms would also have responsibilities to customers similar to banks under the federal Electronic Fund Transfer Act by requiring platforms to reimburse customers who are the victims of fraud. The bill would also strengthen the New York State Department of Financial Services’ (DFS) regulatory authority of digital assets.

The proposal will be submitted to the State Senate and Assembly for their consideration during the 2023 legislative session.

Says James: “Millions of investors have lost hundreds of billions in the value of their cryptocurrency investments because of rampant fraud, including market manipulation, hacking, and opaque business practices.”

Adds James: "We're proposing commonsense measures to protect investors and end the fraud and dysfunction that have become the hallmarks of cryptocurrency."

The Attorney General has taken action against crypto firms Celsius, KuCoin and Nexo in recent months.

Politicians have lined up to back James's plan. “I strongly support the efforts of Attorney General James to ensure the most robust and meaningful consumer and financial protections for those who use cryptocurrency,” says State Senator Cordell Cleare.

“The lack of transparency plaguing the crypto industry causes immense harm to countless investors, especially low-income New Yorkers and people of color who carry a disproportionate share of the losses,” adds New York City Comptroller Brad Lander.