📩 Letitia James: Current Stablecoin Bills Lack Investor Protections
New York Attorney General Letitia James has called on the U.S. Congress to strengthen two key pieces of proposed legislation regulating stablecoins and digital assets, arguing that their current forms fail to adequately protect investors.
In a letter to Congress on Tuesday, James expressed concerns over the STABLE Act (Stablecoin Transparency and Accountability for a Better Ledger Economy) and the GENIUS Act (Guiding Uniform and Responsible Digital Asset Innovation), stating:
"These bills lack the necessary safeguards to protect the American people."
⚖️ Push for Balanced Regulation: Innovation with Financial Safety
James emphasized that Congress should take the time to develop legislation that both encourages innovation and safeguards the financial system, noting:
"We urge Congress to strike a balance — fostering innovation while protecting our globally respected banking infrastructure."
💸 Warning: Anonymous Crypto Transactions Threaten National Security
The New York AG warned that the current bills fail to address the risks posed by unregulated, anonymous crypto transactions, which she said facilitate fraud, crime, and potentially undermine national security.
"Unregulated cryptocurrency activity poses a threat to investors, the economy, and our national security."
🏦 Call to Regulate Stablecoin Issuers Like Banks
James urged lawmakers to amend the bills to ensure that stablecoin issuers are regulated similarly to banks, given their comparable roles in the financial system.
She recommended:
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FDIC-style deposit insurance for stablecoin holdings
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Mandatory digital identity verification for all transactions
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Measures to protect small community banks from being overshadowed by stablecoin issuers
"Stablecoin issuers perform bank-like functions and should be held to the same standards to prevent systemic risks."
🧓 James Opposes Retirement Crypto Investment and Lax Regulations
Letitia James has consistently voiced opposition to crypto investment by retail and institutional entities. In April, she urged Congress to ban retirement funds from investing in cryptocurrencies, calling them:
"Speculative assets with no intrinsic value."
She has also filed multiple lawsuits against crypto exchanges and companies operating in violation of state laws.
📝 Criticism of the CLARITY Act: A Legal Loophole for Crypto Bad Actors
In a previous letter sent last month, James criticized the proposed CLARITY Act (Crypto Regulation for Asset Legal Integrity and Transparency), arguing that it would:
"Create a technology-specific legal loophole that undermines nearly a century of securities law meant to protect U.S. investors."
She claimed the bill protects anonymous bad actors and lacks sufficient anti-fraud enforcement tools.
🏛️ Ongoing Debate Over Stablecoin Regulation in Congress
The GENIUS Act passed the U.S. Senate with bipartisan support last month, while the STABLE Act cleared a House committee in April. Supporters of these bills — including Senators Kirsten Gillibrand and Bill Hagerty — argue that the legislation would protect consumers and promote responsible digital innovation.
However, AG James insists that without stronger protections, these laws could lead to more harm than benefit.
✅ Summary:
Letitia James continues to play a leading role in pushing for stronger crypto regulation, warning that without proper oversight, digital assets could undermine both financial markets and public trust.
