New York Attorney General Letitia James has encouraged Congress to set clear and consistent national standards for cryptocurrencies.  In a letter to senior leaders, including Senate Majority Leader John Thune and House Speaker Mike Johnson, she emphasized the necessity of investor protection and financial stability. James suggested that cryptocurrency businesses register with a regulatory authority and follow minimal, standard protocols for listing digital currencies. She cautioned that the use of a patchwork of individual state regulations creates confusion, exposes investors to risk, and potentially compromises the stability of the US financial system as a whole.

Significance of the Appeal

In a letter to lawmakers dated April 10, James has urged congressional leaders to implement realistic federal laws for cryptocurrencies and to remove digital assets from US pension systems. James stressed the importance of cryptocurrency companies registering with a federal regulatory authority and meeting clear listing rules for digital tokens. James emphasized her issues at a point when Congress is debating new bills to oversee stablecoins, a type of digital currency that is tied to the US dollar.

She said that if adequate safeguards are not established, the swift and unregulated growth of these virtual currencies might erode the US dollar’s global standing, create avenues for national security issues through illegal use, and lead to large financial market disruptions. She reiterated these points in her letter and called on legislators to act before it is too late to manage. In the letter she mentions that,

“Without appropriate safeguards, the unchecked proliferation of digital assets i) undermines U.S. dollar dominance, ii) weakens national security as digital assets may be used to anonymously finance criminal operations and fund adversarial regimes, iii) undermines the stability of financial markets, iv) subjects investors to price manipulation and rigged markets, v) facilitates fraud that drains billions of dollars from hardworking Americans, and vi) extracts assets and investment from the American economy.”

The letter comes as Congress prepares to vote on the GENIUS Act, which seeks to establish the first-ever laws for stablecoins—cryptocurrencies linked to assets such as the US dollar. In her letter, James encouraged Congress to require stablecoin issuers to maintain a physical presence in the United States and deposit US Treasuries or other cash-equivalent assets in US banks. James is also advocating for rules requiring platforms to work closely with anti-money laundering groups, enforce registration for issuers and intermediaries, prohibit conflicts of interest, provide price transparency, and adopt fraud prevention measures.

Apart from this, James also criticized incorporating cryptocurrencies in retirement funds due to their extreme volatility and absence of intrinsic worth.  She proposed that digital assets are not appropriate for retirement accounts and warned against investment in crypto-tracking exchange-traded funds, which she asserted are susceptible to permanent robbery.

Key Recommendations

In her letter, James proposed several measures to strengthen federal oversight of the crypto industry:

• Mandatory Registration: Crypto companies should be required to register with a federal regulatory agency.​
• Stablecoin Regulations: Stablecoin issuers should maintain a U.S. presence and hold reserves in U.S. banks in cash equivalents such as U.S. Treasuries.
• Anti-Money Laundering Compliance: Platforms should work only with entities compliant with anti-money laundering standards.​
• Investor Protections: Implement measures to protect against conflicts of interest, promote price transparency, and enforce fraud prevention.

A Call for Immediate Action

Letitia James’ push for stricter cryptocurrency laws comes at a critical moment. As digital currencies expand and adapt, it is becoming increasingly vital for policymakers to intervene and establish clear rules to safeguard investors and maintain financial stability. Having a single, consistent set of national norms would help to increase trust and eliminate misunderstanding. Moving forward, the course of U.S. crypto policy will be determined by how government officials and industry figures collaborate to strike the correct balance between fostering new technologies and protecting ordinary citizens.