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New York state’s legislature is mulling a bill that would outlaw crypto fraud, including rug pulls and private key theft.

The bill would also reportedly make it a crime for firms to withhold disclosure of token ownership.

This is not the first time New York has proposed such a bill. During the 2021 to 2022 legislative session, New York State introduced Senate Bill S8839, which sought to define crypto fraud crimes and establish penalties for those crimes. The bill, sponsored by former New York Senator Kevin Thomas, ultimately failed to pass into law.

Today, losses from crypto crime amount to $51 billion a year, Chainalysis data shows.

Last month, the U.S. Securities and Exchange Commission set up the Cyber and Emerging Technologies Unit to combat crypto crime. "It will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies,” said Mark Uyeda, the Acting Chairman of the SEC.

However, under the Trump administration, some SEC enforcement staff reviewing crypto crimes have been reassigned to other parts of the agency.

The industry has long struggled with fraud, scams, and hacks. Most executives recognize the necessity of tackling illicit activity in the crypto space, if only as a business incentive.

“We have to admit as an industry that crypto has attracted more fraudsters than we’d like,” Coinbase CEO Brian Armstrong said after the high-profile implosion of FTX in 2022. Many had hoped the downfall of FTX and other bad actors would spark a wave of compliance. However, the Federal Bureau of Investigation saw a 45% jump in crypto-related losses in 2023, recording $5.6 billion of losses from crypto-related crime that year.