New York prosecutors criticize the GENIUS law on stablecoins
Five prosecutors from New York are highlighting a significant legal gap in U.S. regulations governing stablecoins. They argue that the GENIUS law protects issuers more than victims of fraud. Tether and Circle are at the center of controversial accusations.
In brief
The Attorney General of New York and four district attorneys say that the GENIUS Act provides "legal cover" for stablecoin issuers.
Tether and Circle are accused of profiting from crime while refusing to fully cooperate with authorities.
According to the prosecutors, Tether decides on a case-by-case basis whether to cooperate with law enforcement, without any binding obligation.
Tether and Circle, under fire for the GENIUS law
Attorney General Letitia James does not mince words. In a letter signed along with four district attorneys, she argues that the GENIUS law fails to meet its original goal: to prevent stablecoins from being used as vehicles for financial crimes.
The text, enacted in July 2024 by Donald Trump, was intended to establish a clear regulatory framework for payment stablecoins in the United States.
The problem raised by the prosecutors lies in the lack of real restrictions. Tether, based in El Salvador, claims to apply a "zero tolerance" policy towards illegal activities.
However, the company clarifies at the same time that it has "no absolute legal obligation" to respond to civil or criminal proceedings in the United States.
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