New York State Attorney General Letitia James is urging Congress to take aggressive steps to regulate the cryptocurrency market, warning that current legislation under consideration fails to provide meaningful protections for investors, national security, or the financial system. In a letter to congressional leaders, James called for major changes to the federal GENIUS Act and STABLE Act, both of which seek to legalize and regulate stablecoins—a class of cryptocurrency pegged to traditional assets like the U.S. dollar.
Her office warns that without stronger guardrails, the rapid growth of stablecoins could expose millions of Americans to scams, criminal activity, and economic instability.
Stablecoin issuers should be regulated like banks, NY says
Bad actors find stablecoins appealing because people often transact them anonymously, even as they become central to digital finance. To mitigate the risks, Attorney General James recommended the following key reforms:
- Regulate issuers as banks: Apply bank-level oversight, capital requirements, and real-time supervision.
- FDIC insurance: Protect stablecoin deposits with the same guarantees offered to bank account holders.
- Mandatory digital ID: Require identity verification for all stablecoin transactions to combat money laundering and terrorist financing.
- Onshore requirements: Prevent stablecoin firms from operating overseas to avoid U.S. regulation.
- Support community banks: Ensure federal crypto rules do not undercut local financial institutions.
- State oversight preserved: Uphold state-level authority to enforce fraud protections and investor safeguards.
NY pushes back on federal proposals seen as too lenient
The U.S. Senate recently passed the GENIUS Act, while a parallel proposal, the STABLE Act, is also under review. James criticized both bills as lacking the tools needed to address the systemic risks posed by unregulated stablecoins.
In addition, she submitted a formal statement to the House Financial Services Committee on the CLARITY Act, which aims to regulate broader digital assets. James argued that the bill would preserve anonymity for bad actors and fail to prevent fraud or market manipulation.
Enforcement against crypto scams intensifies in New York
James’s push for regulation follows a series of high-profile enforcement actions by her office:
- June 2025: Froze $300,000 in crypto linked to scams targeting Russian-speaking New Yorkers
- January 2025: Filed suit to recover $2.2 million stolen via job text scams
- June 2024: Sued NovaTechFx for operating an illegal crypto pyramid scheme, defrauding 11,000+ New Yorkers
- May 2024: Recovered $2 billion from Genesis Global Capital for crypto fraud victims
These actions underscore the Attorney General’s belief that strong, enforceable regulations are critical to protecting consumers from increasingly sophisticated financial crimes.
What’s next for crypto regulation in the U.S.?
As Congress works to reconcile multiple cryptocurrency bills, state officials like James are pressing for reforms that prioritize transparency, accountability, and consumer protection. The final shape of federal crypto legislation may determine how digital finance evolves—and how well everyday investors are shielded from risk.
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