New York prosecutors warn on GENIUS Act

New York prosecutors have raised concerns that the US federal stablecoin law known as the GENIUS Act could weaken fraud enforcement and provide legal cover for stablecoin issuers, according to a report.

A letter signed by New York Attorney General Letitia James and four district attorneys warned that the law may fail to adequately protect victims of stablecoin-related fraud.

“The reality for many victims, therefore, is that funds stolen in or converted to USDT will never be frozen, seized, or returned,”

The letter said, referring to practices by Tether.

The letter also criticised Circle, saying its policies were “significantly worse than those of Tether for victims of fraud,” despite the firm portraying itself as a partner to law enforcement.

Circle chief strategy officer Dante Disparte said the company “has always prioritised financial integrity” and argued the GENIUS Act reinforces obligations for stablecoin issuers to combat illicit activity.

Tether said it takes fraud and misuse of USDT seriously but noted it does not have the same legal obligations as a US-regulated financial institution because it is headquartered in El Salvador.

The GENIUS Act, signed into law by Donald Trump in July, sets a national framework for payment stablecoins and is due to be implemented within 18 months.