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Cryptocurrency Poses Threats to National Security
Six Key Points for Promoting Federal Cryptocurrency Regulation
Call to Ban Inclusion of Crypto Assets in Retirement Funds
Letitia James warned in a 14-page letter that the continued lack of proper regulation in the cryptocurrency industry could lead to significant national threats, including the erosion of the dollar’s dominance, the facilitation of criminal activities, threats to national security, and the destabilization of financial markets. Furthermore, Letitia James stated that without regulation in the cryptocurrency market, investors would be exposed to “price manipulation and fraudulent markets,” which could foster scams, resulting in “billions of dollars in assets being stripped from hardworking Americans and drawn out of the U.S. economy.”
Six Key Points for Promoting Federal Cryptocurrency Regulation
Specifically, Letitia James outlined six key points for federal cryptocurrency regulation in an open letter to Congress:
- Require stablecoin issuers to establish U.S. entities and be subject to regulation.
- Mandate that stablecoins be backed by U.S. dollars or U.S. Treasury bonds as assets.
- Prohibit trading with non-compliant entities (those not adhering to anti-money laundering regulations).
- Establish a registration system for issuers and intermediary institutions.
- Prevent conflicts of interest and enhance price transparency.
- Implement fraud prevention mechanisms.
She emphasized that these are fundamental measures to protect investors and maintain financial stability, which should not be delayed any longer.
Call to Ban Inclusion of Crypto Assets in Retirement Funds
In addition to calling for tighter cryptocurrency regulation, Letitia James criticized the lack of a real price discovery mechanism for crypto assets, which makes prices unpredictable. Unlike traditional ETFs supported by stocks or bonds, the crypto assets used to back cryptocurrency ETFs could potentially be permanently stolen, posing extremely high risks. Therefore, she urged Congress to legislate a clear prohibition on retirement funds or index ETFs investing in crypto assets.