New York Attorney General Criticizes GENIUS Stablecoin Act for Inadequate Consumer Protections

According to a ChainCatcher report, New York Attorney General Letitia James and four district attorneys in the state recently sent a letter to several Democratic lawmakers, criticizing the major consumer protection deficiencies in the "GENIUS Stablecoin Act," which was signed into law by former President Trump last year. The letter specifically pointed out that the bill does not require stablecoin issuers to return stolen funds in the event of theft. Tether (USDT) and Circle (USDC) were named in the letter, as the two major stablecoin issuers continue to earn interest on the assets involved even after thefts occur, while victims lack effective avenues for recourse. New York prosecutors argued that while the bill grants stablecoins a higher level of "legitimacy," it does not simultaneously strengthen key regulatory requirements such as anti-terrorism financing, anti-money laundering, and protection against cryptocurrency fraud. The GENIUS Act is currently entering the implementation phase, requiring stablecoins to be fully backed by U.S. dollars or highly liquid assets and imposing annual audits on 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 financial transactions. According to data from Chainalysis, approximately 84% of illegal cryptocurrency transactions in 2025 involved stablecoins. Based on this, New York is calling for further strengthening of the regulatory framework to better protect consumer rights.