New York Attorney General Letitia James has urged U.S. congressional leaders to take action on regulating digital assets. She warned that the growing influence of cryptocurrencies, particularly Bitcoin, could undermine the U.S. dollar’s dominance in the global financial system. She called for stronger federal regulations to protect investors from fraud and criminal activity within the digital asset space.
Letitia James Warns Congress on Bitcoin Threat to Dollar
In her letter, James highlighted the importance of creating a federal legal framework for digital assets. She mentioned that a lack of proper regulation enhances the risks of these digital currencies, such as fraud and unpredictability of money.
The New York Attorney General, Letitia James, said that the use of Bitcoin poses a challenge to the supremacy of the US Dollar, particularly as people and companies prefer digital currencies for cross-border transactions. This statement also echoes Larry Fink, the CEO of BlackRock, who said that Bitcoin could act as a safe haven against the US dollar in view of the increasing US fiscal issues and inflationary pressures.
New York’s AG Letitia James also noted that there should be regulation and supervision of Bitcoin, and other cryptocurrencies and digital assets to curb instances of manipulation. While appreciating the potential that these digital assets possess, she noted the dark side if left uncontrolled that they could be used to fund and support criminal operations and adversarial regimes.
“Millions of New Yorkers actively engage in the buying, selling or holding of cryptocurrency and other digital assets, and they deserve additional safeguards,” James added.
Stablecoin Regulation and Investor Protection
New York AG Letitia James also focused on the issue of stablecoins, a type of cryptocurrency that is pegged to a stable asset, such as the U.S. dollar. She urged Congress to implement regulations that would require stablecoin issuers to have a U.S. presence and back their tokens with U.S. dollars or treasuries. Stablecoins transfer value across different cryptocurrencies, and James warned that without oversight, they are subject to manipulation and fraud.
Moreover, James called for stronger protections to prevent scams that have caused significant financial losses for investors.
She noted that cryptocurrency fraud has become a growing issue, with millions of dollars lost due to deceptive schemes. “Thousands of investors in New York and across the country have lost millions of dollars to cryptocurrency scams and fraud that could be prevented with stronger federal regulations,” James explained.
Stablecoins, Retirement Accounts, and U.S. Financial Security
New York AG Letitia James specifically discouraged the inclusion of digital assets in retirement accounts, such as IRAs. She argued that cryptocurrencies are too volatile and risky to be part of long-term savings plans. Digital assets, including Bitcoin, have experienced significant price fluctuations. James believes this instability could pose a risk to the financial security of investors, particularly those relying on retirement savings, like the latest Fidelity move to debut a crypto IRA.
In addition to protecting investors, James argued that a comprehensive regulatory framework for digital assets would bolster national security.
The anonymity of cryptocurrency transactions is exploited to fund illicit activities, making it vital for the U.S. government to establish strong rules. James urged Congress to adopt regulations that would require cryptocurrency companies to register with a regulatory body and comply with anti-money laundering standards.
Growing Influence of Crypto in Washington
The digital asset sector has gained significant traction in Washington in recent years, with major cryptocurrency companies increasing their lobbying efforts. In the 2024 election cycle, the industry spent over $119 million supporting pro-crypto candidates.
As discussions around crypto regulation intensify, President Trump has also shown interest in reforming U.S. cryptocurrency policies, especially in relation to stablecoins.
Bo Hines, a key advisor on Trump’s Council of Advisers on Digital Assets, stated last month that the White House aims to pass a stablecoin bill before August.
Hines HAS also congratulated Paul Atkins on his confirmation as Chairman of the SEC, expressing optimism about working together to make the United States the “crypto capital of the world.” This ‘crypto capital’ status would only happen if the regulation of digital assets, like the New York AG’s suggestion, is successful under the new pro-crypto US SEC Chair and President Donald Trump.
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