New York Attorney General Letitia James urged Congress to strengthen pending stablecoin and cryptocurrency legislation, stating that the current versions of the bills fail to protect investors.

James expressed in a letter to Congress on Tuesday that the "Stablecoin Transparency and Accountability to Promote Better Ledger Economy Act" (STABLE Act) and the "U.S. Stablecoin National Innovation and Establishment Act" (GENIUS Act) "do not include the necessary safeguards needed to protect the American public."

"We urge Congress to take the necessary time to draft legislation that can promote innovation while protecting our banking system, which is the envy of the world," she said.

Both bills aim to regulate stablecoins, with the U.S. Senate passing the GENIUS Act last month in a bipartisan vote, while the House committee submitted the STABLE Act for a full House vote in April.

James warned that the stablecoin legislation lacks sufficient regulatory safeguards to address anonymous transactions that could facilitate criminal activity, fraud, and threaten national security.

"Unregulated cryptocurrency transactions pose dangers to investors, the economy, and national security," she said.

James called on Congress to amend the bills to regulate stablecoin issuers like banks.

She added that stablecoin issuers should also provide Federal Deposit Insurance Corporation (FDIC) insurance protection for stablecoin deposits and require all transactions to use digital identity technology to prevent anonymous criminal use.

James also urged the protection of local banks, as stablecoins could provide "unwarranted advantages to already struggling community banks."

Supporters of stablecoin legislation, such as Senators Kirsten Gillibrand and Bill Hagerty, believe it will protect consumers, promote responsible innovation, and maintain the dominance of the dollar.

In a letter last month, James also criticized the "Digital Asset Market Clarity Act" (CLARITY Act), arguing that it protects the anonymity of bad actors and fails to provide adequate fraud prevention measures.

She stated that the proposed legislation "creates a loophole for a specific technology that undermines nearly a century of securities laws designed to protect Americans and their investors."

James has previously opposed digital assets multiple times. In April, she urged Congress to prevent U.S. retirement funds from investing in cryptocurrencies or cryptocurrency exchange-traded funds, which she believes have "no intrinsic value."

During her tenure, she has also sued several cryptocurrency companies and exchanges.

Related: FATF's cryptocurrency list hints at the next round of regulatory crackdowns

Original article: “New York AG Urges Congress to Bolster Protections in Crypto Bills”

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