New York Attorney General Letitia James has called on Congress to tighten two key stablecoin bills, saying they leave investors exposed.
In a letter sent Tuesday, James told lawmakers that the Stablecoin Transparency and Accountability for a Better Ledger Economy Act (STABLE Act) and the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) lack basic protections.
She urged Congress to add bank‑style oversight, FDIC insurance, and digital identity checks before moving forward.
Calls for Stronger Rules
James warned that millions of Americans invest in cryptocurrencies without enough safeguards. She argued that letting stablecoin issuers operate without bank‑level rules puts the public, the economy, and national security at risk.
According to James, unregulated transactions can fuel fraud, money laundering, and financing for criminal groups. She urged lawmakers to pause and rewrite the bills so they include clear guardrails for issuers.
Bank‑Like Oversight
To protect investors, James suggested treating stablecoin issuers like banks. She said they should face strict supervision and meet capital requirements that let regulators spot and fix problems quickly.
She also wants guaranteed redemption on demand and FDIC insurance for stablecoin deposits. These steps would help shield consumers if an issuer fails or freezes funds.
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Security and Identity
James flagged the risk that stablecoins can hide illicit flows. She urged adding digital identity technology to every purchase and transaction.
That measure would make it harder for terrorists, gangs, and sanctioned individuals to move money anonymously. It could also curb scams and reduce market manipulation by bad actors.
Onshore Issuers and Community Banks
The attorney general argued stablecoin firms must be based in the United States. She said that onshore rules protect national security and give U.S. authorities a clear path to enforce laws.
James also defended community banks, noting that regulated lenders are vital to rural areas and underserved neighbourhoods. She warned that unchecked stablecoin growth could undermine these local institutions and cut off key financial services.
State Authority and Fraud Fight
James asked Congress to preserve state power over investor protection. She said federal law shouldn’t weaken existing state rules that guard consumers.
She also urged stronger tools for state and federal law enforcement to crack down on fraud. In her view, the bills as written would hand bad actors too much freedom at both the state and federal levels.
Concerns Over the CLARITY Act
Aside from the stablecoin measures, James submitted a statement on the Digital Asset Market Clarity Act, another pending bill. She said the CLARITY Act threatens to protect criminals by keeping transactions anonymous.
The attorney general warned it would create a rigged market and fail to offer real fraud prevention. She again stressed that Congress must not override state investor laws in the name of uniformity.
As Congress debates these bills, James’s letter signals a push for tougher safeguards. Lawmakers will have to weigh innovation against the need for clear rules that protect the public.
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