NY Attorney General Proposes Crypto Regulation Bill to Combat Fraud and Dysfunction

New York Attorney General Letitia James has proposed a bill that would give the New York Department of Financial Services stronger authority to regulate digital assets, including the power to shut down businesses engaging in fraud and illegality. The legislation seeks to ban marketplaces from keeping custody of customer funds and would require exchanges to reimburse customers if they are victims of fraud. The bill also targets a range of stakeholders from crypto issuers and exchange platforms to digital asset influencers, with all to be held to detailed disclosure requirements. The proposed legislation must still be passed by state lawmakers to become state law.