Odaily Planet Daily reports that New York State Attorney General Letitia James and four local prosecutors recently wrote to several Democratic lawmakers criticizing the significant flaws in the “GENIUS Stablecoin Act” signed into law by Trump last year, particularly its failure to require stablecoin issuers to return stolen funds in cases of theft.
The letter specifically mentions Tether (USDT) and Circle (USDC), arguing that the two major stablecoin issuers can still earn interest on assets after theft, while victims lack effective recourse. The New York prosecutors point out that although the law grants stablecoins greater “legitimacy endorsement,” it does not simultaneously strengthen key regulatory requirements such as anti-terror financing, anti-money laundering, and crypto scam prevention.
The GENIUS Act is currently in the implementation phase, requiring stablecoins to be fully backed by USD or high-liquidity assets, and mandating annual audits for issuers with a market cap exceeding $50 billion. However, the New York authorities believe these measures are still insufficient to address the widespread use of stablecoins in illegal financial transactions.
According to Chainalysis data, approximately 84% of illegal crypto transactions in 2025 involve stablecoins. Based on this, New York is calling for further strengthening of the regulatory framework to better protect consumer rights.
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