New York State Representative Clyde Vanel proposed a bill attempting to legislate regulations around crypto scams. The bill defines a wide variety of crypto-related crimes as fraud, but it limits the resultant penalties.

The crypto community has responded positively to the effort, citing the unprecedented torrent of scams. Federal regulators have reduced their crypto enforcement lately, but legislative efforts could pass constructive new statutes.

New York Bill Plans Crypto Regulation

US crypto regulation is in limbo right now, and New York State Representative Clyde Vanel may be able to provide solutions. Since President Trump took office, federal regulators like the SEC have been claiming they don’t have jurisdiction over crypto enforcement and dropping a tranche of lawsuits.

To that end, Vanel proposed a new bill to clarify crypto regulation.

“Any person, partnership, corporation, company, trust or association, developer, or any agent or employee thereof who violates the provisions of this article shall be subject to a civil fine of not more than $5 million or imprisoned not more than twenty years, or both,” it read. These lesser fees apply to individuals, while organizations could face fines of up to $25 million.

Vanel’s crypto regulation bill sets an ambitious task for itself. The section on penalties is fairly boilerplate, but its various statutes define much of the entire Web3 industry.

The bill describes several distinct types of scams, thefts, and other criminal practices, legally defining them as fraud. These definitions don’t just apply to crypto; they also cover NFTs, blockchains, DeFi projects, and more.

So far, the crypto community has responded favorably to the bill’s proposed regulations. It’s easy to see why, as the community is stuck in an unprecedented wave of scams.

The largest crypto hack ever just happened, social engineering scams are raking in huge amounts, and fake political meme coin scams are being launched by sitting heads of state.

In short, the community is worried that these scams may damage crypto’s credibility. Therefore, a bill to actually hammer out beneficial regulations could be very useful.

Under Biden’s administration, federal regulators led the charge on crypto crimefighting, sparking fears of overreach. Maybe a legislative effort could change these perceptions.

Since Vanel filed this bill in New York, its proposed regulations could have a serious impact if passed. The state is a critical finance hub in the US, and New York-based prosecutors handle some of the biggest crypto crimes.

Vanel’s effort doesn’t even ascribe particularly harsh penalties; it’s more important to legally define these actions as fraud. Case in point, the Southern District of New York sentenced Sam Bankman-Fried to higher fines and jail time than Vanel’s bill would allow.

However, it’s still too early to say whether this bill may pass. The community’s initial reaction was positive, but other opinions may come to light.

Additionally, Vanel introduced this without any cosponsors. The Democrats hold a firm grasp on New York, so Republican cooperation is not necessary, but the bill may still die in committee.

Earlier today, RedStone amended the terms of its RED token airdrop without warning, causing Binance to suspend its listing. This caused the price to crash dramatically amidst community feedback, but the project soon responded.

Now, an extra 2% of RED tokens are being airdropped today, and Binance is listing them as normal. The price has rebounded, but community resentment may linger all the same.

RedStone Airdrop Concerns and Binance Listing

RedStone, a DeFi oracle project, has run into some difficulties with its RED token airdrop. Over the past few months, the project became increasingly popular among the crypto community, and received support from leaders in Liquid Staking.

RedStone’s native token RED launched today, and Binance was supposed to list it on launch time.

However, the project claimed at the last minute that the airdrop would be smaller than usual, and Binance refused to list the token.

“Due to unexpected and last minute changes by RedStone to the allocation of their community airdrop distribution, the trading start time for RED will be suspended until further notice. RedStone had originally committed to distribute 9.5% of their total supply to the community via airdrop distribution. The project has now lowered this amount to 5% of the total supply,” it read.

Naturally, RedStone’s announcement caused a huge controversy within the community, which was only compounded by Binance.

Binance is the world’s largest crypto exchange, and its listings have consistently led to huge price spikes for the relevant tokens. For a time, this decision looked like a huge fiasco, leading RedStone supporters to speak out:

“The RedStone airdrop situation is a mess. It looks like 95% of users received nothing, despite years of activity— people who spent 1-2+ years engaging with the project were completely ineligible. I’ve never seen a precedent like this. Every launch like this reinforces [that] there is no real transparency in airdrops, and every mistake like this damages the brand,” one user said.

However, after Binance announced the suspension, RedStone addressed the controversy. The firm responded to community feedback, amending its airdrop plan once again.

5% of RED tokens have already been distributed, and the missing 4.5% will be distributed six months after TGE. Today, 2% will be airdropped on top of that.

Following the amendment, Binance reversed its decision and RED rallied back up, reversing previous losses.

According to data from both CoinGecko and CoinMarketCap, RED launched at $0.80 today. While it briefly went up to $0.98 after Binance’s re-listing announcement, it’s yet to hit the dollar mark.

Overall, RedStone’s reputation may suffer as a result of this incident, even though it acted quickly to correct the problem.

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