New York Attorney General Letitia James is sounding the alarm on the need for tightened cryptocurrency regulation to protect investors and the national economy. In a recent correspondence with congressional leaders, James has called for a concerted effort to reinforce legislation around stablecoins, the cryptocurrency variant that’s typically tied to the value of conventional assets like the U.S. dollar. The attorney general’s proactive stance comes as a response to legislation that she deems woefully inadequate in safeguarding against the potential dangers associated with digital currencies.
The letter, addressed to Congress, pointedly criticizes the still-pending Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. James argues that current measures lack the rigor, such as that of regulating issuers akin to banks, necessary for credible investor protection. “Many people across the country invest millions of dollars in cryptocurrencies, yet our laws fail to protect them and their money from fraud,” James is quoted as saying in the statement obtained by the Attorney General’s Office. Echoing her concern, the language of the GENIUS Act suggests a burgeoning legal framework, however, James insists it fails to adequately preempt threats to investors and the nation’s financial bedrock.
One of the core recommendations by James is to align the supervision of stablecoin issuers with the stringent protocols that govern traditional banking institutions. Her proposal includes the provision of FDIC insurance for stablecoin deposits, a step aimed at engendering a sense of security and trust among investors. The attorney general also urges for the inclusion of digital identity credentials in stablecoin transactions. This move is pitched as a deterrent against the anonymous transactions that not only jeopardize national security but, also frequently underlie criminal activities such as money laundering and terrorist financing.
Addressing the national security concerns surrounding stablecoins, James’ letter presses for Congress to insist on digital identity technology which, would in theory, make it harder for illicit actors to cloak their transactions. “Unregulated cryptocurrency transactions are a danger to investors, the economy, and national security,” she explained in a statement obtained by the Attorney General’s Office.
