New York State Representative Clyde Vanel proposed a bill attempting to legislate regulations around crypto scams. The bill defines a wide variety of crypto-related crimes as fraud, but it limits the resultant penalties.
The crypto community has responded positively to the effort, citing the unprecedented torrent of scams. Federal regulators have reduced their crypto enforcement lately, but legislative efforts could pass constructive new statutes.
New York Bill Plans Crypto Regulation
US crypto regulation is in limbo right now, and New York State Representative Clyde Vanel may be able to provide solutions. Since President Trump took office, federal regulators like the SEC have been claiming they don’t have jurisdiction over crypto enforcement and dropping a tranche of lawsuits.
To that end, Vanel proposed a new bill to clarify crypto regulation.
“Any person, partnership, corporation, company, trust or association, developer, or any agent or employee thereof who violates the provisions of this article shall be subject to a civil fine of not more than $5 million or imprisoned not more than twenty years, or both,” it read. These lesser fees apply to individuals, while organizations could face fines of up to $25 million.
Vanel’s crypto regulation bill sets an ambitious task for itself. The section on penalties is fairly boilerplate, but its various statutes define much of the entire Web3 industry.
The bill describes several distinct types of scams, thefts, and other criminal practices, legally defining them as fraud. These definitions don’t just apply to crypto; they also cover NFTs, blockchains, DeFi projects, and more.
Wave of Crypto Scams Continue to Harass the Community
So far, the crypto community has responded favorably to the bill’s proposed regulations. It’s easy to see why, as the community is stuck in an unprecedented wave of scams.
The largest crypto hack ever just happened, social engineering scams are raking in huge amounts, and fake political meme coin scams are being launched by sitting heads of state.
In short, the community is worried that these scams may damage crypto’s credibility. Therefore, a bill to actually hammer out beneficial regulations could be very useful.
Under Biden’s administration, federal regulators led the charge on crypto crimefighting, sparking fears of overreach. Maybe a legislative effort could change these perceptions.
Since Vanel filed this bill in New York, its proposed regulations could have a serious impact if passed. The state is a critical finance hub in the US, and New York-based prosecutors handle some of the biggest crypto crimes.
Vanel’s effort doesn’t even ascribe particularly harsh penalties; it’s more important to legally define these actions as fraud. Case in point, the Southern District of New York sentenced Sam Bankman-Fried to higher fines and jail time than Vanel’s bill would allow.
However, it’s still too early to say whether this bill may pass. The community’s initial reaction was positive, but other opinions may come to light.
Additionally, Vanel introduced this without any cosponsors. The Democrats hold a firm grasp on New York, so Republican cooperation is not necessary, but the bill may still die in committee.
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