New York Attorney General Letitia James has called on Congress to pass comprehensive federal legislation to regulate cryptocurrencies and digital assets, warning that the absence of a national framework heightens the risk of widespread fraud and financial instability.
Her letter to congressional leadership follows the U.S. Department of Justice’s announcement that it is dismantling federal enforcement focused on crypto fraud.
“Protect investors, strengthen financial markets, and stop fraud”
Attorney General James stated that “countless New Yorkers invest in cryptocurrency and digital assets, and more must be done to protect them and their money.” She added, “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. I am urging Congress to pass legislation that would strengthen federal regulations on the cryptocurrency industry to protect investors, strengthen financial markets, and stop fraud.”
The letter emphasizes that fraud involving digital assets now accounts for 10 percent of all financial fraud cases and represents half of the total financial fraud losses in the United States. The Attorney General said federal legislation is necessary to curb criminal use of digital assets and prevent financial manipulation, citing an estimated $12 billion in cryptocurrency-related losses during 2024.
Attorney General James recommended that Congress adopt a regulatory framework that would:
- Require issuers of stablecoins to operate within the United States and face regulatory oversight;
- Mandate stablecoins be backed by U.S. dollars or Treasury securities;
- Limit business dealings to platforms compliant with anti-money laundering laws;
- Compel issuers and intermediaries to register for public accountability;
- Introduce controls to prevent conflicts of interest;
- Promote price transparency across platforms;
- Mandate active identification and prevention of fraud; and
- Prohibit digital assets in retirement accounts.
She also linked digital asset regulation to national security concerns, citing risks posed by anonymous cross-border transactions that can support illicit operations and hostile foreign entities.
Over the past two years, Attorney General James has taken a high-profile role in prosecuting cryptocurrency-related misconduct. In January 2025, she made headlines by delivering notice of litigation via NFT to scammers. In June 2024, her office sued NovaTechFx over an illegal pyramid scheme that impacted over 11,000 New Yorkers and defrauded investors of more than $1 billion in crypto. In May 2024, she secured a $2 billion recovery for victims from Genesis Global Capital.
Her actions also include securing over $22 million from KuCoin in December 2023, $4.3 million from Coin Cafe in May 2023, and $24 million from Nexo in January 2023. Attorney General James also brought legal action against the former CEO of Celsius for allegedly concealing the company’s financial troubles while misleading investors.
Attorney General James maintains that a clear federal regime is necessary to unify fragmented state-level enforcement and ensure investors nationwide receive consistent protections.
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