New York Attorney General Letitia James has proposed new legislation dubbed the Crypto Regulation, Protection, Transparency, and Oversight Act (CRPTO) to increase state
regulators' enforcement authority over the crypto industry.
James' office will submit the bill to the New York State Senate and Assembly for consideration within the 2023 legislative session that will continue until June 8.
The proposed bill codifies the New York State Department of Financial Services' (NYDFS) authority to issue licenses to crypto firms seeking to operate in the state.
CRPTO also gives the New York Attorney General's office the authority to enforce, issue subpoenas, and impose civil penalties against the crypto firms engaging in law violations.
The legislation proposes a $10,000 civil penalty per violation for each individual and $100,000 per violation for each crypto firm.
In addition, James aims to obtain authorization to close companies accused of fraud and illegal actions.
Other details in the proposed legislation include requiring crypto exchanges to have independent public audits of their financial statements, compensate defrauded customers, and mandate
Know Your Customer (KYC) procedures.
The bill also bans the use of the stablecoin term for virtual currencies whose value is not pegged to the dollar in a one-to-one ratio.
The New York Attorney General's office has been famous for its strict approach toward the crypto industry and filed lawsuits against many crypto platforms, including KuCoin and
CoinEx, over the last several months.
The NYDFS, the state's financial regulator, has issued a license dubbed BitLicense for eight years to let a company run virtual currency activities under regulations in the state.
The license has been criticized many times over the years for restrictive measures, long wait times, and high compliance costs.
The NYDFS also recently enforced new rules that would be adopted while assessing crypto companies and force virtual asset firms to adhere to strict guidelines for capitalization,
cybersecurity, and anti-money laundering (AML) measures.
KYC is a common regulatory process generally implemented by financial services providers, including banks and crypto exchanges, to identify and verify their customers by asking for some
key personal information and documents.
The process aims to improve trust in the industry, help service providers to assess the risks, and combat AML and terrorism financing.
