New York Attorney General Letitia James has called on Congress to enhance cryptocurrency legislation, particularly concerning stablecoins, to better protect investors. In a letter addressed to congressional leaders, she highlighted the potential risks associated with the recent Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act passed by the Senate. This act aims to legalize and regulate stablecoins, a form of cryptocurrency tied to assets like the U.S. dollar, which can be involved in anonymous transactions linked to criminal activities.
Attorney General James expressed concern that without stringent regulatory oversight, the issuance of stablecoins could pose significant threats to public safety. She urged Congress to amend the GENIUS Act by implementing regulations similar to those governing banks and suggested providing Federal Deposit Insurance Corporation (FDIC) insurance for stablecoin deposits.
“Many people across the country invest millions of dollars in cryptocurrencies, yet our laws fail to protect them and their money from fraud,” said Attorney General James. “Unregulated cryptocurrency transactions are a danger to investors, the economy, and national security. Congress must pass legislation that strengthens oversight of cryptocurrency to help stop fraud and criminal activity and protect the American public.”
In addition to her critique of the GENIUS Act, Attorney General James addressed another proposed bill—the Stablecoin Transparency and Accountability for a Better Ledger Economy Act (STABLE) Act—arguing that both lack adequate safeguards against stablecoin-related risks. She recommended incorporating digital identity technology into stablecoin transactions as a measure against scams and market manipulation.
Attorney General James outlined several proposals for Congress: treating stablecoin issuers as banks; imposing stricter supervision; ensuring FDIC-backed redemption guarantees; enhancing national security through digital identity credentials; keeping issuers onshore; supporting community banks; and preserving state-level supervisory authority.
Her concerns extend beyond these acts. In her statement submitted to the U.S. House Financial Services Committee regarding the Digital Asset Market Clarity (CLARITY) Act, she criticized its failure to curb fraudulent activities effectively while protecting anonymity.
This appeal is part of ongoing efforts by Attorney General James’ office to tighten cryptocurrency regulations. Recent actions include freezing $300,000 in scam-linked cryptocurrency and pursuing legal action against entities like NovaTechFx for illegal schemes affecting thousands of investors.
