New York Attorney General Criticizes GENIUS Stablecoin Act: Insufficient Consumer Protection

Odaily News According to a recent letter from New York State Attorney General Letitia James and four local district attorneys to several Democratic lawmakers, the GENIUS Stablecoin Act, which was signed into law by former President Trump last year, has significant flaws in consumer protection. Notably, it does not require stablecoin issuers to return stolen funds in the event of theft.

The letter specifically named Tether (USDT) and Circle (USDC), arguing that these two major stablecoin issuers could still earn interest on related assets after funds are stolen, while victims lack effective recourse channels. The New York prosecutors pointed out that while the bill grants stablecoins higher "legitimacy endorsement," it fails to simultaneously strengthen key regulatory requirements such as anti-terrorist financing, anti-money laundering, and cryptocurrency fraud prevention.

The GENIUS Act is currently entering the implementation phase. It requires stablecoins to be fully backed by U.S. dollars or highly liquid assets and mandates annual audits for issuers with a market capitalization exceeding $50 billion. However, New York prosecutors believe these measures are still insufficient to address the widespread use of stablecoins in illicit fund flows.

According to data from Chainalysis, approximately 84% of illicit cryptocurrency transaction volume in 2025 involved stablecoins. Based on this, New York authorities are calling for further strengthening of the regulatory framework to better protect consumer rights.