Extra Extra!! New Crypto Bill in NYC!!️ 🗞

*sings* New Yorrrkkkk, concrete jungles where dreams are made of, there’s nothing you can’t do! 

…except maybe not if you’re in crypto. 😗 

We’re coming to you live with some hot off the press information about the future of crypto in New York, and let’s just say things could get interesting. 

In one of our recent posts, we highlighted a key insight from a16z’s 2023 State of Crypto Report: “The U.S. is losing its lead in web3.” With the NYC General Attorney seeking more authority to police crypto, this is leading people to wonder what it means for the future of crypto in the United States. Is it truly decentralized with government intervention or not? Will web3 builders move elsewhere to cities across the world who have a more optimistic outlook of web3? This week, we’re breaking down everything you need to know on these topics. 

Let’s dive in.

The Crypto Regulation, Protection, Transparency and Oversight Act: Explained

Just a few days ago, on May 5th, New York’s Attorney General Letitia James proposed the CRPTO Act, one of the most extensive sets of crypto regulations that the country has ever seen. And while most crypto legislation is pretty restrictive, this one is focused on helping the investors. 

So what’s the idea behind it?

Crypto's been a bit of a mess with fraud and sketchy practices costing investors a fortune, and the industry is missing rules to stop the bad guys. It's been especially rough for lower-income and minority investors. But the CRPTO Act wants to change that by bringing in some oversight and protection for investors, especially those most vulnerable to financial disasters.

Now we’re going to save you some time and give you the three key takeaways from the bill:

1. Stop conflicts of interest: The bill would stop crypto companies from doing shady stuff like owning multiple parts of the industry or trading for their own benefit

2. Require public financial reporting: Crypto companies would have to share important information with the public, like financial statements and risks,  increasing transparency and helping investors make informed decisions.

3. Protect investors: crypto companies would need to follow rules to protect customers' money and reimbursing them for losses. The Attorney General can enforce the law and punish companies for breaking it.

As crypto-affectionados, we love that the NY AG is looking out for investors a few ways: 

• Reimbursements ($$): If the bill is passed, crypto fraud victims could get their lost money back from exchanges.

• Transparency: corporations now need to provide information to investors and disclose any conflicts of interest.

• Fair and Square: The crypto market is now forced to develop and disclose listing guidelines, promoting everyone to play the crypto-game fair and square.

But is this bill all it’s set out to be? 🤔 We a have a few doubts:

• Additional costs: The bill could create additional costs for cryptocurrency exchanges that could be passed on to investors or even force exchanges leaving the market altogether.

• Slow the industry down: Right now it’s only in NY, but imagine this regulation giants steam in other cities, states, or countries? Excessive regulation could stifle innovation and growth in the industry.

• Inadequate protection: Does the bill do enough to protect investors? It relies on exchanges self-reporting to prevent conflicts of interest, but it's unclear if that's enough. Will exchanges actually do it? What's the cost?

NYC has been one the main U.S. cities leading the way in crypto, and this legislation is their next bold move. 

We all know that NYC has long been a city where opportunity lies and lately it’s been a hotspot for technological innovation. However, as mentioned above, there is some talk about whether this regulation would slow down movement in the industry or not, whether for better or worse. Here are some ways NYC has already made its mark:

1. The Mayor gets paid in crypto: Eric Adams, the NYC Mayor apparently received his first three paychecks in Bitcoin to make a clear statement of his excitement and optimism for the space. Yet it’s a bit ironic that he took this progressive step forward and now the city’s regulatory body is imposing stricter regulations on the industry. Some people consider it inconsistent, but to be honest it may be for the better, especially as we consider how to drive more adoption and acceptance. 

2. NYC has been a crypto hotspot: With NYC being one of the leading financial hubs in the world, it’s no surprise that it’s also become a hotspot for crypto. Investors and builders from across the country have found their home in the city, as well as Miami and the Bay Area. The competition among these cities for talent and businesses is largely going to be impacted by the regulation that exists. It’ll be interesting to see if NYC can get this right and retain its innovative spirit!

3. NYC leads the way in liberal policies: The question is whether other cities and states will follow New York's lead on crypto regulation, or if they will take a more open approach. Neither is necessarily wrong, but it's important to strike a balance between regulating the industry to prevent fraud and abuse while also fostering an environment that encourages innovation and economic growth. 

What does this mean for you?

The Met Gala, Knicks in the playoffs, the NY AG proposing the CRPTO Act. NY is up right now. And for investors, this act seems like a positive move towards more transparency in the crypto world. But will the new protections be effective? It's hard to say. While the bill still has to pass, the fact that one of the world's biggest crypto hubs is making moves towards regulation could inspire other places to do the same. One thing is for sure, the question of whether crypto can be regulated is still up in the air, but someone's gonna figure it out. Right?

Till next week! Kendall & Chad out ✌🏽