NY prosecutors criticize GENIUS Act over stablecoin risks

NY prosecutors say the GENIUS Act fails to prevent stablecoin fraud and protects issuers like Tether and Circle more than consumers, lacking strong regulatory oversight.

New York prosecutors have voiced strong criticism of the GENIUS Act, a federal law aimed at regulating stablecoins in the United States. They argue that the Act contains major loopholes in combating fraud, potentially granting legal immunity to stablecoin issuers such as Tether and Circle. According to prosecutors, the law prioritizes issuer protection over consumer safeguards, lacks meaningful constraints, and does not require companies to return stolen funds to victims. Tether and Circle are accused of profiting from crimes involving stablecoins, with Tether reportedly freezing only select suspicious transactions and Circle maintaining policies deemed insufficient for user protection. Prosecutors estimate both companies earned $1 billion each in 2024 from investing reserve funds, including those backing stolen or frozen assets. The criticism centers on the GENIUS Act's perceived failure to ensure accountability and regulatory oversight, leaving consumers and the financial system at risk.