NY Attorney General Letitia James warns stablecoin bills put Americans at risk, urges stronger oversight

Bills to regulate stablecoins working their way through Washington put Americans at risk and need bolstering, said New York Attorney General Letitia James in a letter to lawmakers.

James, who has led efforts in pursuing actions against crypto firms, said the Senate's Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act needs strengthening in part through regulating stablecoin issuers more like banks and requiring insurance on deposits.

The GENIUS bill has backing from the White House and President Donald Trump has said he looks to have a bill on his desk to sign by August. A House version, called the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act needs work as well, James said. 

"We recognize the urgency and importance of getting stablecoin legislation right; however, we have serious concerns that the STABLE Act and the GENIUS Act do not contain the necessary guardrails to protect the American public," James said in the letter dated Monday. "We urge Congress to take the time necessary to draft legislation that will enhance innovation while protecting our banking system that is the envy of the world."

The GENIUS Act was passed out of the full Senate last month. The bill requires stablecoins to be fully backed by U.S. dollars or similarly liquid assets, mandates annual audits for issuers with a market capitalization of more than $50 billion, and establishes guidelines for foreign issuance. 

The House has its own version of a stablecoin bill that has some differences compared to GENIUS, such as state pathways and treatment of foreign issuers. The House Financial Services Committee advanced the STABLE legislation out of its committee in May, but has not yet gone to a full House vote. 

This is not the first time James has taken aim at the stablecoin sector. James sent a letter in April to congressional leaders cautioning them against embracing foreign issuers like Tether and said lawmakers should include "onshoring stablecoins to protect the U.S. dollar and the treasuries market." 

In this week's letter, James said stablecoin legislation should delegate the Federal Reserve Board to oversee non-bank stablecoin issuers. 

"Its political independence ensures the Board can freely conduct its supervisory roles without undue pressure from the President or Congress," James said.