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New York’s top legal authority has sounded the alarm on crypto, demanding Congress impose sweeping regulations to safeguard national security and economic stability.
NYAG Letitia James Sounds Alarm With Blistering Crypto Warning to Congress
New York Attorney General Letitia James issued a letter to Congressional leaders on April 8, urging lawmakers to enact comprehensive digital asset regulations to safeguard the nation’s economic strength, security, and consumers. Addressed to Senate Majority Leader John Thune, Senate Minority Leader Charles Schumer, House Speaker Mike Johnson, and House Minority Leader Hakeem Jeffries, the letter underscored the wide-ranging risks posed by unregulated cryptocurrencies. James stated:
Regardless of any potential benefits that innovation in this industry may offer, digital assets create unique risks that must be managed to serve America’s national interests. We write to identify various of these risks and suggest tenets of regulation to guard against them.
James’s letter urges lawmakers to adopt a framework focused on both economic resilience and consumer protection. Highlighting national security concerns, fraudulent schemes, and the destabilization of financial institutions linked to crypto volatility, she called for clear, enforceable standards.
To combat these risks, she urged Congress to include several key principles in digital asset legislation: prioritizing the onshoring of stablecoins to protect the U.S. dollar and Treasury market; requiring platforms to conduct business only with entities that comply with anti-money laundering standards; mandating registration of issuers and intermediaries to ensure accountability, transparency, and basic public protections; establishing safeguards against conflicts of interest; promoting price transparency; ensuring platforms and intermediaries actively identify and prevent fraud and scams; and prohibiting the use of digital assets in retirement accounts.
The letter warned that digital assets are being used by state actors and criminals to evade sanctions, fund terrorism, and launder money. James cited North Korea’s $6 billion crypto theft and Russia’s use of cryptocurrency to skirt sanctions. She linked the 2023 failures of Signature and Silicon Valley Bank to crypto-related risks and highlighted widespread fraud and investor losses, including cases like Celsius and Luna/Terra. The New York Attorney General also warned that unstable stablecoins could trigger liquidity crises and said crypto’s global, opaque nature makes it a target for scams costing Americans billions.
James concluded her letter with an appeal to lawmakers to prioritize protections over industry promises. While recognizing the potential for innovation, she emphasized that those opportunities must not come at the cost of national integrity or consumer safety. She wrote:
As Congress takes the mantle to propose legislation governing the cryptocurrency industry, we hope it also takes action to mitigate the risks posed by the industry to America’s national security, financial stability, and citizens.
