New York Attorney General Letitia James (D) sent a Thursday letter to leaders in Congress urging them to crack down on crypto regulations days after the Justice Department (DOJ) disbanded the National Cryptocurrency Enforcement Team.
James argued that without safeguards, digital assets could undermine U.S. dollar dominance, weaken national security if individuals anonymously finance criminal operations and fund adversarial regimes, and subject investors to price manipulation in rigged markets.
“Much of the cryptocurrency industry, by design, has opaque ownership structures and a lack of centralized control, making it attractive as a medium of exchange for illicit finance by adversarial state actors like North Korea, China, Russia, Venezuela and Iran, terrorist groups like Hamas and [ISIS], and global drug and crime cartels,” James wrote.
“North Korea has stolen more than $6 billion in crypto to fund its nuclear program, making it the third largest holder of Bitcoin,” the New York attorney general, who has signed on to several lawsuits against the Trump administration, noted.
The New York official highlighted bitcoin as an ever-present rival to the U.S. dollar while noting victims of cryptocurrency fraud in the letter sent to Senate Majority Leader John Thune (R-S.D.), Senate Minority Leader Chuck Schumer (D-N.Y.), House Speaker Mike Johnson (R-La.) and House Minority Leader Hakeem Jeffries (D-N.Y.) earlier this week.
“Cryptocurrency fraud has had a real impact in New York,” James wrote. “About 26,000 New Yorkers deposited and lost $440 million on the Celsius trading platform.”
“Its founder and CEO pled guilty to two federal criminal charges in December 2024 and continues to face a lawsuit from my office for the harm he caused,” she added.
DOJ officials said Monday they wouldn’t prioritize managing cryptocurrency enforcement but rather the prosecution of those who victimize digital asset investors, or those who use digital assets for criminal offenses such as terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing.
Meanwhile, President Trump has charted a new course for crypto investors since returning to the White House, inviting many top traders to speak at the first ever White House crypto summit. He also created the first government reserve of bitcoin along with a “digital asset stockpile.”
“My administration also is working to end the federal bureaucracy’s war on crypto, which was really going on pretty wildly during Biden, until the election came about,” the president said during his remarks at the Digital Assets Summit while touting deregulation.
James, who argued for more regulation, said some concerns could be mitigated through onshore stable coin backing.
“The U.S. should require stablecoins to be backed by the U.S. dollar or treasuries on a one-to-one basis and be issued by companies that have an American presence and are regulated under U.S. laws and subject to federal and/or state oversight,” she wrote to the congressional leaders.
“Those dollars and treasuries should be deposited in banks and institutions under U.S. supervision. So-called stablecoins not backed one-to-one by U.S. dollars create market confusion for investors who may not otherwise be aware that no actual dollars exist behind the tokens,” she suggested.
