NYAG Challenges Trump-Backed GENIUS Act, Calls for Stronger Stablecoin Regulations

New York Attorney General Letitia James has issued a stark warning about the GENIUS Act, arguing that the proposed stablecoin legislation lacks sufficient safeguards for investors and the broader financial system. The bill, which passed the Senate last month with bipartisan support, now faces scrutiny as it moves to the House for a potential July vote.

James contends that unregulated cryptocurrency transactions pose systemic risks, citing vulnerabilities to fraud and national security threats. The GENIUS Act would require stablecoin issuers to maintain full dollar backing and disclose reserves monthly—measures the NYAG deems inadequate without additional enforcement mechanisms.

The regulatory clash comes as stablecoins increasingly serve as on-ramps for crypto trading and DeFi participation. Market observers note the outcome could shape custody requirements for exchanges and impact dollar-pegged tokens' liquidity across trading platforms.