New York Attorney General Releases Legislative Language to Regulate Digital Assets at the State Level

Letitia James, the Attorney General of the State of New York, released a legislative draft called the “Crypto Regulation, Protection, Transparency, and Oversight Act,” (CRPTO Act) which would add a new layer of regulation on top of the current BitLicense regulatory framework. According to a press release from the Attorney General’s office, the bill would “require independent public audits of cryptocurrency exchanges and prevent individuals from owning the same companies, such as brokerages and tokens, to stop conflicts of interest.” Additionally, the bill creates new regulatory responsibilities for crypto platforms, imposes prospectus and listing requirements, requires digital asset brokers to obtain and maintain custody of the digital assets, and strengthens the regulatory authority of the New York State Department of Financial Services to oversee the digital asset space. A Davis Polk client memo notes “it is unlikely—though certainly not impossible—to be taken up, debated and enacted as proposed in the remaining weeks of the 2023 legislative calendar.” The New York proposal is in response to what many state jurisdictions view as an impasse in Congress to pass digital asset regulatory reform.

Click here to read the NY Attorney General’s proposal.
Click here to read the Attorney General’s press release.
Click here to read a client memo from Davis Polk.