New York Attorney General Letitia James has called on U.S. congressional leaders to enforce stronger federal regulations on the cryptocurrency industry and to ban digital assets from retirement portfolios, citing the potential risks to investors, the economy, and national security.
In a 14-page letter addressed to lawmakers on April 10, James outlined six major threats the largely unregulated crypto space poses. These include concerns over price manipulation, fraud, economic instability, and the erosion of U.S. dollar dominance. She warned that without immediate legislative intervention, the unchecked growth of digital assets could
“undermine the stability of financial markets”
and facilitate criminal activity that
“weakens national security.”
James emphasized the importance of “common-sense” oversight for stablecoins, advocating for laws that require issuers to operate in the U.S. and be subject to domestic regulations. Key proposals included ensuring stablecoins are backed exclusively by U.S. dollars or treasuries, mandatory registration for crypto issuers, strict anti-money laundering compliance, and enhanced investor protections to prevent market manipulation and fraud. The speaker raised concerns about the volatility of digital assets, particularly their unsuitability for pension funds, stating they lack intrinsic value and do not reflect genuine market fundamentals. Additionally, she highlighted the heightened risks of crypto-backed exchange-traded funds (ETFs) compared to traditional ETFs associated with stocks and bonds.
“As Congress takes the mantle to propose legislation governing the cryptocurrency industry”,
she urged,
“we hope it also takes action to mitigate the risks posed by the industry to America’s national security, financial stability, and citizens.”
The attorney general’s warning comes after reports that the U.S. Department of Justice has disbanded its federal criminal cryptocurrency fraud enforcement unit. This move has stirred concerns about diminishing oversight when industry risks are escalating. Additionally, North Carolina is exploring the inclusion of cryptocurrency in its state retirement system, with lawmakers introducing two related bills on March 24 and 25.
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