New York Attorney General Advocates for Crypto-Free Pensions and Stricter Regulations
April 11, 2025 – New York, NY – New York Attorney General Letitia James has called on Congress to implement federal regulations that would prohibit the inclusion of cryptocurrencies and crypto-related investments in U.S. retirement funds. In a detailed letter to congressional leaders dated April 10, she expressed strong concerns regarding the inherent risks associated with digital assets, particularly their volatility and lack of intrinsic value.
Concerns Over Digital Assets
In her 14-page correspondence, James emphasized the need for "common sense" regulations to safeguard investors and protect the integrity of the financial system. She cited several critical risks posed by the unchecked growth of the cryptocurrency market, including potential threats to national security, market stability, and consumer protection.
"I’m urging Congress to pass legislation that would strengthen federal regulations on the cryptocurrency industry to protect investors, strengthen financial markets, and stop fraud," James wrote. She outlined her belief that the current lack of regulation could lead to price manipulation, fraud, and significant financial losses for American investors.
Recommendations for Regulatory Measures
Among the essential recommendations highlighted in her letter, James advocated for legislation requiring stablecoin issuers to maintain a U.S. presence and regulatory oversight, as well as ensuring that these digital currencies are backed by US dollars or U.S. Treasury securities. She also called for a framework that mandates platforms to transact only with entities compliant with anti-money laundering regulations, registration requirements for issuers and intermediaries, and measures to promote price transparency and fraud prevention.
James particularly underlined her opposition to allowing digital assets in pension funds, citing their unpredictability and high volatility as major drawbacks. “Digital assets are uniquely unsuitable for retirement savings due to their high volatility,” she asserted, stressing that the lack of intrinsic value undermines their reliability as investments for long-term savings.
Risks of Crypto ETFs for Retirement Funds
The Attorney General warned against permitting retirement funds to invest in crypto-tracking exchange-traded funds (ETFs). Unlike traditional ETFs backed by stocks and bonds, she noted that cryptocurrencies backing these funds are susceptible to risks, including potential theft, which could jeopardize the savers’ investments. "Cryptocurrency held to back cryptocurrency ETFs are at risk of permanent theft," she remarked, reinforcing her point about the unique threats posed by crypto assets.
A Call for Legislative Action
As Congress prepares to engage with the evolving landscape of cryptocurrency regulation, James’ urgent plea aims to foster deliberation on legislative measures that will mitigate the risks associated with digital currencies. She concluded her letter by underscoring the importance of the upcoming legislative actions: “As Congress takes the mantle to propose legislation governing the cryptocurrency industry, we hope it also takes action to mitigate the risks posed by the industry to America’s national security, financial stability, and citizens.”
This call for regulation comes at a crucial time, following reports of the U.S. Department of Justice dismantling its federal criminal cryptocurrency fraud enforcement division, indicating a pressing need for a structured approach to manage the current uncertainties in the cryptocurrency sector.
The push for clearer regulations reflects the growing concern among state authorities about the impact of unregulated digital assets on economic stability and investor safety. As the debate continues in Washington, stakeholders in both the financial and cryptocurrency markets will be closely monitoring developments.
Conclusion
Letitia James’ stance highlights the increasing scrutiny being directed at the cryptocurrency industry, particularly regarding its implications for future retirement savings and financial security for millions of Americans. With her strong advocacy for a regulatory framework, it remains to be seen how Congress will respond to her call for action against the risks associated with digital assets.