NY Attorney General Pushes for Stricter Oversight in Stablecoin Legislation

Highlights:

• Letitia James warns that current crypto bills do not protect against fraud or anonymous digital transactions.
• The Attorney General has urged Congress to treat stablecoin firms like banks to reduce risks in the financial system.
• James suggested that stablecoin laws must include identity checks and insurance to protect users and local banks.

New York Attorney General Letitia James has asked Congress to revise two proposed federal bills on digital assets. In a letter to lawmakers, she said the STABLE Act and the GENIUS Act do not include strong enough protections. According to James, both bills allow gaps that could lead to criminal activity and fraud. She warned that anonymous transactions using digital currencies can endanger the economy and public safety.

NEW YORK AG CALLS FOR STRONGER STABLECOIN REGULATION

NY Attorney General Letitia James urges Congress to tighten crypto and stablecoin oversight.

Recommends issuers be regulated like banks and secured by FDIC insurance.

Warns current federal bills may overlook systemic…

— CryptoEdge (@EdGeraldX) July 2, 2025

James explained that these bills fail to hold stablecoin issuers accountable. She said they also do not address the risk of anonymous transfers, which can support illegal use. Because of this, she urged Congress to take more time and develop a stronger legal framework. She stressed that lawmakers must protect the U.S. financial system while still encouraging innovation.

Both the Senate and the House have taken steps on the bills. The GENIUS Act passed the Senate in a bipartisan vote last month. It requires all stablecoins to hold full reserves in U.S. dollars or other liquid assets. The STABLE Act passed a House committee and now awaits a full floor vote. Despite the progress, James said these bills still need key improvements.

Stronger Stablecoin Legislation to Protect Financial System

James insists that stablecoin issuers should be regulated in the same way as traditional banks. She argued that these companies behave like banks in the sense that they issue assets that are treated as money. She feels that they should be equal in terms of the standards they should be meeting.

James also advocated the existence of a stablecoin deposit insurance comparable to what banks have in the FDIC. According to her, the consumers must have protection in case of a platform crash. She also wanted lawmakers to incorporate digital identity checks in the stablecoin legislation. These tools would help prevent criminal use of stablecoins by removing anonymity.

James said the current version of the bills gives large stablecoin firms an unfair advantage over smaller banks. She warned that community banks, which already face struggles, could lose even more ground. To address this, she asked that the Federal Reserve Board oversee non-bank stablecoin issuers. She said the board’s independence makes it better equipped to monitor these firms without political pressure. She also urged lawmakers to act against the influence of foreign issuers. In an earlier letter, she warned that companies like Tether could weaken the dollar and disrupt U.S. markets. James said stablecoin rules must focus on keeping these issuers under U.S. oversight.

Track Record Shows Longstanding Crypto Scrutiny

James has spoken out against digital assets on several occasions. In April, she told Congress to keep crypto out of U.S. retirement funds. She said these assets do not hold true value and can bring risk to long-term savings.

She also opposed the Digital Asset Market CLARITY Act. In a separate letter, she said the bill weakens investor protections by allowing loopholes for certain technologies. Throughout her time in office, James has taken action against multiple crypto companies. Her letters on stablecoin legislation and legal moves reflect her ongoing concern about digital assets and investor safety.