New York Attorney General Letitia James has urged Congress to pass comprehensive federal legislation regulating cryptocurrencies, warning that the absence of nationwide standards is putting U.S. investors and markets at risk.
Why Is Federal Cryptocurrency Regulation Needed?
In her April 10 letter to congressional leaders, AG James emphasized the dangers of an unregulated cryptocurrency market:
- Crypto scams now account for 10% of all financial fraud
- 50% of total fraud-related financial losses stem from crypto scams
- Americans lost an estimated $12 billion in 2024 alone
James highlighted the urgency of establishing a national regulatory framework to replace the inconsistent patchwork of state laws currently in place. The letter follows the U.S. Department of Justice’s controversial move to dismantle its federal cryptocurrency fraud enforcement team—a decision that could further erode investor protections.
What Would the Proposed Crypto Legislation Require?
Attorney General James is advocating for a set of strict federal guidelines that would bring transparency and oversight to the crypto space. Her proposed measures include:
| Proposed Regulation | Purpose |
|---|---|
| Require U.S. presence for stablecoin issuers | Ensure accountability under U.S. law |
| Back stablecoins with USD or Treasuries | Prevent unbacked or unstable digital currencies |
| Register all issuers and intermediaries | Improve transparency and regulatory oversight |
| Anti-money laundering compliance | Combat illicit financial activity |
| Ban digital assets in retirement accounts | Protect long-term retirement savings |
| Prevent conflicts of interest | Encourage fair market practices |
| Identify and stop fraud | Proactively protect investors |
Crypto Crackdowns in New York: A Pattern of Enforcement
Attorney General James has led the charge in holding crypto firms accountable:
- Jan 2025: First U.S. official to serve legal notice via NFT to scammers.
- Jun 2024: Sued NovaTechFx over a billion-dollar pyramid scheme affecting 11,000+ New Yorkers.
- May 2024: Secured $2 billion from Genesis Global Capital for defrauded investors.
- Dec 2023: Won $22 million settlement against KuCoin for failing to register.
- May 2023 – Jan 2023: Recovered millions from Coin Cafe, Nexo, and Celsius for various illegal operations.
James argues that these enforcement actions, while impactful, reveal the limits of state-level authority and the need for federal consistency.
National Security and Market Integrity at Stake
Beyond consumer protection, James frames crypto regulation as a matter of national security. She warns that digital assets are increasingly being used to fund criminal operations and potentially hostile foreign regimes.
“Countless New Yorkers invest in cryptocurrency and digital assets,” James wrote. “Thousands have lost millions of dollars to preventable scams. Strong federal regulations can stop the bleeding, protect our economy, and shield Americans from future harm.”
What’s Next for Congress?
With growing bipartisan concerns over crypto-related fraud and financial volatility, Attorney General James’s call adds pressure on lawmakers to act. Whether Congress will heed the warning and prioritize a legislative package remains to be seen.
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Attorney General Calls for Federal Cryptocurrency Regulation Amid Rising Fraud
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