NY Attorney General Urges Congress to Keep Pensions Crypto-Free, Citing “No Intrinsic Value”

Letitia James Pushes Congress to Keep Crypto Out of Pensions, Calls for Stronger Federal Oversight

New York Attorney General Letitia James has urged U.S. lawmakers to take decisive action to prevent cryptocurrencies from entering the retirement savings system, warning that digital assets pose significant threats to financial stability, investor safety, and national security.

In a 14-page letter sent to congressional leaders on April 10, James laid out a comprehensive case for "common sense" federal regulation of the cryptocurrency industry. Among her key demands: barring crypto and crypto-related exchange-traded funds (ETFs) from being included in pension fund portfolios.

“Digital assets are uniquely unsuitable for retirement savings due to their high volatility,” James wrote. “The underlying value of cryptocurrency is unpredictable and not determined by true price discovery because they have no intrinsic value on which their prices are based.”

She warned that crypto-tracking ETFs also pose serious risks, as the assets backing them are vulnerable to “permanent theft,” unlike traditional ETFs backed by regulated securities such as stocks and bonds.

James’s call comes amid growing concern among regulators over the rapid growth of the digital asset space and its increasing entanglement with traditional finance. Her letter outlines six major risks associated with leaving the sector unregulated, including:

• The erosion of U.S. dollar dominance

• National security risks stemming from illicit activity

• Market instability and lack of investor protection

• Price manipulation and opaque markets

• Rampant fraud draining billions from retail investors

• The outflow of investments from the broader American economy

An excerpt of James’ letter to Congress. Source: Office of the New York State Attorney General

In response, James called for a legislative framework that would impose meaningful oversight on crypto companies. Her proposals include:

• Requiring stablecoin issuers to be U.S.-based and fully backed by U.S. dollars or treasuries

• Mandating anti-money laundering (AML) compliance for all crypto platforms

• Enforcing registration requirements for issuers and intermediaries

• Instituting protections against conflicts of interest

• Promoting price transparency

• Requiring robust fraud prevention measures

“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,” she said.

The timing of James's letter is significant, arriving just as the U.S. Department of Justice has reportedly dismantled its federal criminal cryptocurrency fraud enforcement division—a move that some fear may signal a regulatory gap.

James has long been a vocal critic of the crypto industry and has taken legal action against several major players for alleged fraud and noncompliance. Her latest intervention underscores a broader push by regulators to bring digital assets under tighter federal scrutiny, particularly as adoption spreads into traditional investment vehicles like retirement plans.