New York Attorney General Letitia James has urged Congress to strengthen pending stablecoin and crypto legislation, saying the current versions of the bills don’t protect investors.
James said in a letter addressed to Congress on Tuesday that the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act “do not contain the necessary guardrails to protect the American public.”
“We urge Congress to take the time necessary to draft legislation that will enhance innovation while protecting our banking system, that is the envy of the world,” she said.
Both bills aim to regulate stablecoins, and the US Senate passed the GENIUS Act last month in a bipartisan vote, while a House Committee passed the STABLE Act to a full floor vote in April.
James warned that the stablecoin bills lack sufficient regulatory safeguards to tackle anonymous transactions that can facilitate criminal activity and fraud and threaten national security.
“Unregulated cryptocurrency transactions are a danger to investors, the economy, and national security,” she said.
Treat stablecoin issuers like banks
James called for Congress to amend the bills so that stablecoin issuers would be regulated like banks.
“Given that stablecoin issuers essentially function as banks, they should be subject to the same regulations as banks in order to reduce systemic risk.”
Stablecoin issuers should also provide Federal Deposit Insurance Corporation insurance protection for stablecoin deposits and require digital identity technology for all transactions to prevent anonymous criminal use, she added.
James also urged protection for local banks as stablecoins may provide an “undeserved advantage over community banks that are already in decline.”
Proponents of the stablecoin legislation, such as Senators Kirsten Gillibrand and Bill Hagerty, argue that it will protect consumers, enable responsible innovation, and safeguard the dominance of the US dollar.
James says crypto CLARITY Act also not up to par
James also criticized the Digital Asset Market Clarity (CLARITY) Act in a letter last month, arguing it protects bad actors’ anonymity and fails to provide adequate fraud prevention measures.
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She said that the proposed legislation “creates a technology-specific loophole that upends almost one hundred years of securities laws meant to protect America and its investors.”
NY AG has a history of crypto actions
James has previously rallied against digital assets on several occasions. In April, she urged Congress to prevent US retirement funds from investing in crypto or crypto exchange-traded funds, which she deemed to have “no intrinsic value.”
She has also sued several crypto companies and exchanges during her tenure.
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