Concerns have been raised by New York officials regarding the potential implications of the GENIUS Act, which was enacted in July by former President Donald Trump. The legislation sets guidelines for payment stablecoins but has been criticized for not sufficiently addressing fraud, according to a report from CNN.
New York Attorney General Letitia James and four district attorneys have expressed their worries in a letter, asserting that the act may unintentionally provide a legal shield for stablecoin issuers like Tether and Circle, allowing them to engage in fraudulent activities without consequences. The letter highlights that Tether has only frozen a limited number of suspicious transactions in its stablecoin, USDt (USDT), leaving many victims without recourse for their stolen funds.
Circle's policies were also criticized, being described as less favorable for fraud victims compared to Tether's. Despite this, Circle's Chief Strategy Officer Dante Disparte defended the company, stating that they are committed to financial integrity and regulatory standards. Tether, headquartered in El Salvador, emphasized its serious stance against fraud but noted it does not have a legal obligation to comply with certain state regulations.