New York Attorney General Letitia James has recently taken a bold step in urging Congress to implement stringent federal regulations concerning the cryptocurrency industry, particularly advocating for the exclusion of digital assets from U.S. pension plans. In a comprehensive 14-page letter sent to congressional leaders, she emphasizes the necessity of instituting common-sense regulations to safeguard investors and enhance the stability of financial markets.
In her letter, James outlines several significant risks associated with the unregulated proliferation of digital assets, warning that it undermines the dominance of the U.S. dollar and could pose threats to national security by facilitating criminal activities. “Without appropriate safeguards, the unchecked growth of digital assets could diminish the stability of our financial markets,” she states emphatically.
Among the potential dangers of unregulated cryptocurrency, James asserts that investors are particularly vulnerable to manipulative practices and fraudulent schemes that can siphon billions of dollars from the economy, harming hardworking Americans. She emphasizes the urgent need for federal regulations to prevent such occurrences.
James recommends several regulatory measures, including the requirement for stablecoin issuers to maintain a U.S. presence and adhere to regulatory oversight, as well as ensuring stablecoins are backed by U.S. dollars or treasuries. Additionally, she advocates for more rigorous standards for platforms engaging with cryptocurrency to comply with anti-money laundering laws, adequate registration for issuers, and improved transparency to protect investors.
The Unsuitability of Cryptocurrency for Pensions
One of the core arguments made by James concerns the inclusion of cryptocurrency in pension funds, which she labels as inappropriate due to the inherent volatility and lack of intrinsic value associated with digital assets. She asserts, “The underlying value of cryptocurrency is unpredictable and not determined by true price discovery.”
“Digital assets are uniquely unsuitable for retirement savings due to their high volatility.”
James also expresses strong opposition to investing retirement funds in crypto-tracking exchange-traded funds (ETFs), warning that unlike traditional funds backed by stocks or bonds, cryptocurrencies held for such ETFs carry the risk of permanent theft.
As Congress seeks to craft legislation governing the cryptocurrency sphere, James hopes that lawmakers will prioritize actions designed to mitigate the risks that digital assets pose to the nation’s economic stability and security.
This call for regulation is strategically timed, following reports of the recent dismantling of the federal criminal cryptocurrency fraud enforcement division by the U.S. Department of Justice.
In conclusion, the recommendations put forth by Attorney General Letitia James underline the growing necessity for thoughtful and systematic regulation within the cryptocurrency industry to protect investors and ensure the financial integrity of the U.S. market.
