New York Attorney General Slams Weak Crypto Bills, Demands Tougher Rules

In a letter sent on July 1, she said the current versions of the STABLE Act and the GENIUS Act are not strong enough to protect people who use or invest in these digital assets.

James said the bills need clearer rules to stop anonymous transactions. She warned that, without proper checks, stablecoins could be used for illegal activity such as fraud or money laundering.

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One of her suggestions is that stablecoin holders get the same kind of insurance protection that banks offer through the Federal Deposit Insurance Corporation (FDIC). This would help protect users if the company behind a stablecoin were to go out of business.

James also recommended that companies behind stablecoins should follow the same rules as banks. Since these companies hold people’s money and promise to keep its value steady, James noted that they should be treated like financial institutions.

This would include meeting certain standards to prevent harm if any of them fail.

Another point raised in the letter was the possible impact on small, local banks. James said stablecoins might create an unfair edge over community banks, which are already losing ground in many areas.

She wants lawmakers to consider how to protect these banks as new financial technologies emerge.

Recently, a group of US crypto advocacy organizations asked lawmakers to revise the CLARITY Act. What did they say? Read the full story.