State lawmakers in New York are calling for additional consumer protections to address the burgeoning and rapidly developing field of investments in cryptocurrencies and its related technologies.
The proposals from state Sen. Kevin Thomas and Assemblyman Clyde Vanel are the latest efforts from state officials to address the cryptocurrency market under the law. The measures are also being introduced as environmental advocates are separately calling for better regulations for bitcoin mining in New York, pointing to the tremendous amount of energy used.
The investment and consumer protections proposals this week center on efforts to protect people against fraud, including so-called “rug pulls” when a developer promotes a new project such as a token and then disappears with the money.
Lawmakers are also proposing fraud protections for virtual tokens and private keys that are used in transactions, as well as cracking down on developers who fail to disclose they have an interest in a virtual token.
“New York is the center for both the global financial system and a growing cryptocurrency industry,” Thomas said. “It’s crucial that we properly balance consumer protection with creating an environment that is ripe for investment and innovation. This future-forward legislation will protect consumers, enhance the security and reliability of the crypto ecosystem, and provide clearer guidance to allow companies to innovate and thrive in the crypto economy.”
Thomas’ office pointed to consumer data showing the rapid growth of cryptocurrency fraud between 2019 and 2021, essentially having tripled during that time. Cryptocurrency also accounted for the second-highest losses from scams, as reported to the Federal Trade Commission in 2021, accounting for $750 million.