New York Attorney General Letitia James is urging Congress to strengthen protections for investors in pending cryptocurrency legislation. In a letter addressed to congressional leaders on Tuesday, July 1, 2025, James expressed concerns that the current versions of the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act "do not contain the necessary guardrails to protect the American public".
The GENIUS Act, which was recently passed by the Senate, and the STABLE Act, which has passed a House Committee, both aim to regulate stablecoins. Stablecoins are a type of cryptocurrency that are pegged to another asset, such as the U.S. dollar. They are often prone to anonymous transactions that can be linked to criminal activity. Attorney General James is warning that legalizing the issuance of stablecoins without substantial regulatory supervision puts the American public at risk.
To protect investors, the economy, and national security, Attorney General James recommends that congressional leaders strengthen the GENIUS Act by regulating the issuers of stablecoins in a similar manner to banks and offer insurance provided by the Federal Deposit Insurance Corporation (FDIC) on stablecoin deposits. She believes that stablecoin issuers should be subject to the same regulations as banks in order to reduce systemic risk. James also wants Congress to mandate digital identity technology for all transactions to prevent anonymous criminal use.
James stated that "Many people across the country invest millions of dollars in cryptocurrencies, yet our laws fail to protect them and their money from fraud". She added that "Unregulated cryptocurrency transactions are a danger to investors, the economy, and national security. Congress must pass legislation that strengthens oversight of cryptocurrency to help stop fraud and criminal activity and protect the American public".
In her letter, James also urged Congress not to interfere with and restrict state investor protection laws. She argues that the lack of strong federal regulations on cryptocurrencies increases the risk of fraud, criminal activity, and financial instability, and risks national security. James has been a vocal advocate for stronger crypto regulations. She has led a series of enforcement actions against crypto firms accused of fraud.
James argues that federal regulations would bolster America's national security, strengthen its financial markets, and protect investors from cryptocurrency scams. She stated that crypto-related scams account for 10% of all financial fraud incidents and 50% of the total dollar losses from fraud cases. She cited an estimated $12 billion in losses to crypto fraud in 2024 alone.
James has also expressed concerns about including crypto in pension funds, stating that digital assets are uniquely unsuitable for retirement savings due to their high volatility. She claims that they have no intrinsic value and that the underlying value of cryptocurrency is unpredictable.
New York has been active in crypto regulation for many years. In 2015, New York was the first state to promulgate a comprehensive framework for regulating virtual currency-related businesses. The "BitLicense" legislation requires operations related to transactions involving any form of virtual currency to obtain a license from the state. The keystones of the BitLicense regulations are consumer protection, anti-money laundering compliance, and cybersecurity rules that are intended to place appropriate “guardrails” around the industry while allowing innovation.
