U.S. Prosecutors Criticize Stablecoin Bill for Failing to Protect Fraud Victims

According to a ChainCatcher report citing CNN, New York Attorney General Letitia James and Manhattan District Attorney Alvin Bragg, among other prosecutors, recently jointly wrote a letter to U.S. senators criticizing the significant flaws in the American stablecoin regulatory bill, the "GENIUS Act," stating that it fails to adequately protect victims of fraud and may provide legal cover for stablecoin issuers to "profit from fraud." In the letter, the prosecutors accused the bill of establishing reserve requirements for stablecoins similar to those of banks, but lacking mandatory provisions requiring companies to return stolen funds to victims. This omission, they argued, would "encourage stablecoin issuers to act more boldly, and even provide legal cover for them to deliberately choose to retain stolen funds rather than return them to victims." The letter further accused two major stablecoin issuers of specific actions: Tether, despite having the ability to freeze suspicious USDT transactions, only handles such cases individually in cooperation with federal law enforcement. Circle, on the other hand, was accused of tending to hold rather than return funds to victims even after agreeing to freeze them, and earning interest by investing in the underlying assets, which creates a "clear" economic incentive to resist law enforcement requests.