New York Attorney General Letitia James is calling on Congress to bolster pending stablecoin and cryptocurrency legislation, arguing that current proposals lack the necessary safeguards to protect investors, consumers, and national security.
In a letter sent to Congress on Tuesday, James criticized the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, warning that the bills fall short of providing proper oversight.
“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,” James wrote.
The GENIUS Act passed the U.S. Senate in a bipartisan vote last month, while the STABLE Act advanced from a House Committee to a full floor vote in April. Both aim to establish a regulatory framework for stablecoins, but James believes the current versions leave room for abuse.
Concerns Over Crime, Fraud, and Systemic Risk
James argued that the proposed legislation does not adequately address the risks posed by anonymous crypto transactions, which she said can be exploited for criminal activity, fraud, and even pose threats to national security.
“Unregulated cryptocurrency transactions are a danger to investors, the economy, and national security,” she warned.
Among her key recommendations, James urged lawmakers to require stablecoin issuers to be regulated like traditional banks. This would include subjecting them to Federal Deposit Insurance Corporation (FDIC) protections and enforcing strict identity verification on all transactions to prevent anonymous misuse.
She also expressed concern about the potential impact of stablecoins on small, local banks, saying the current legislation could give digital issuers an “undeserved advantage over community banks that are already in decline.”
Criticism of CLARITY Act
This is not the first time James has taken aim at crypto legislation. In a separate letter last month, she sharply criticized the Digital Asset Market Clarity (CLARITY) Act, arguing it creates loopholes for bad actors and undermines decades of investor protection laws.
“The proposed legislation creates a technology-specific loophole that upends almost one hundred years of securities laws meant to protect America and its investors,” she said.
Longstanding Crypto Skepticism
Letitia James has consistently taken a tough stance on digital assets. Earlier this year, she urged Congress to ban crypto investments in U.S. retirement accounts, calling cryptocurrencies and related ETFs “speculative assets with no intrinsic value.”
Under her tenure, the New York Attorney General’s office has also launched enforcement actions against several crypto firms and exchanges, positioning the state as one of the most aggressive regulators of the digital asset industry.
Debate Over Innovation vs. Regulation
Supporters of the GENIUS and STABLE Acts—including Senators Kirsten Gillibrand and Bill Hagerty—argue the bills provide a necessary framework to foster innovation while preserving consumer safety and reinforcing the global dominance of the U.S. dollar.
But James maintains that without stronger regulation, the U.S. risks enabling a shadow financial system prone to abuse.
“Given that stablecoin issuers essentially function as banks,” she concluded, “they should be subject to the same regulations in order to reduce systemic risk.”
July 2025, Cryptoniteuae
