Letitia James, New York’s Attorney General, has raised concerns over the potential risks stablecoin bills could pose to US citizens, emphasizing the need for increased regulation. In a recent letter to Congress, James, known for her active role in proceeding against crypto companies, stressed the necessity of fortifying the Senate’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
She suggested that this could be achieved by treating stablecoin issuers akin to banks and mandating insurance on deposits. The GENIUS Act, which is supported by the White House and President Donald Trump, is anticipated to be signed into law by August.
James also voiced her concerns about the House’s Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. “While the urgent need for effective stablecoin legislation is clear, the current drafts of the STABLE and GENIUS Acts lack the requisite safeguards for the American public,” James stated in the letter. She called upon the Congress to take the necessary time to devise a law that fosters innovation while safeguarding the world-renowned US banking system.
Passed by the full Senate last month, the GENIUS Act demands stablecoins to be entirely backed by U.S. dollars or other liquid assets, imposes annual audits on issuers with a market capitalization surpassing $50 billion, and sets out guidelines for foreign issuance. The House’s version, the STABLE Act, holds some distinctions, such as state pathways and the handling of foreign issuers. The House Financial Services Committee advanced the STABLE legislation in May, but it has not yet reached the full House for voting.
This is not the first instance of James criticizing the stablecoin sector. In April, she had urged congressional leaders to be cautious about foreign issuers like Tether, proposing that lawmakers should focus on “onshoring stablecoins” to safeguard the U.S. dollar and the treasuries market. In her recent letter, James suggested that the Federal Reserve Board should be tasked with supervising non-bank stablecoin issuers. “The Board’s political independence allows it to execute its supervisory roles without undue influence from the President or Congress,” she added.
Disclaimer: This article is purely informational and is not intended as legal, tax, investment, financial, or other advice. The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block operates independently to provide objective, impactful, and timely information about the crypto industry.
