New York Attorney General Urges Congress to Ban Cryptocurrencies in Pension Plans

New York Attorney General Letitia James has urged Congress to enact legislation that would establish a federal regulatory framework for cryptocurrencies. In a letter sent to leaders of both chambers of Congress, James emphasized the need for stronger federal regulations to protect investors and strengthen financial stability. She argued that cryptocurrencies lack intrinsic value and pose significant risks to investors, particularly those in pension funds. James urged lawmakers to ensure that any legislation addressing cryptocurrencies explicitly prohibits their inclusion in pension plans, citing the volatile nature of digital assets and the potential for substantial financial losses.

The push for stricter regulations comes amid growing concerns about the lack of oversight in the cryptocurrency industry. James highlighted the need for a comprehensive federal framework that would provide clear guidelines for the issuance, trading, and use of cryptocurrencies. She noted that the current regulatory landscape is fragmented, with different states and agencies implementing varying standards, which can lead to confusion and potential exploitation by bad actors.

James's call to action is part of a broader effort to safeguard the financial interests of American investors. She pointed out that the absence of a federal regulatory framework has allowed cryptocurrencies to operate in a largely unregulated environment, making them susceptible to fraud, market manipulation, and other illicit activities. By establishing clear rules and standards, Congress can help ensure that investors are protected and that the financial system remains stable.

The attorney general's letter also underscored the importance of preventing pension funds from investing in cryptocurrencies. Pension plans are designed to provide retirement security for millions of Americans, and any significant losses could have devastating consequences for retirees. James argued that the volatile nature of cryptocurrencies makes them unsuitable for inclusion in pension portfolios, as they lack the stability and predictability required for long-term investment strategies.

James made a number of recommendations and pushed Congress for legislation that would require stablecoin issuers to have a US presence and regulatory oversight and mandate backing stablecoins with US dollars or treasuries. She also wants regulations that require platforms to work only with anti-money laundering-compliant entities, establish registration requirements for issuers and intermediaries, protect against conflicts of interest and promote price transparency and require fraud prevention measures.

In her letter, James called on Congress to take immediate action to address these issues. She urged lawmakers to work together to develop a comprehensive regulatory framework that would provide clear guidelines for the cryptocurrency industry and protect investors from potential risks. By taking these steps, Congress can help ensure that the financial system remains stable and that investors are protected from the dangers posed by unregulated digital assets.