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

Odaily News The New York State Attorney General, Letitia James, along with four local district attorneys, recently sent letters to several Democratic lawmakers, criticizing the "GENIUS Stablecoin Act" signed into law by Trump last year for having significant flaws in consumer protection, particularly for not requiring 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 the related assets after funds were stolen, while victims lacked effective channels for recourse. New York prosecutors pointed out that although the bill grants stablecoins greater "legitimacy endorsement," it fails to simultaneously strengthen key regulatory requirements such as anti-terrorism financing, anti-money laundering, and cryptocurrency fraud prevention.

The GENIUS Act is currently entering the specific implementation phase, requiring stablecoins to be fully backed by US dollars or highly liquid assets and mandating 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 illegal 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.