New York’s leading prosecutors raised concerns about the new stablecoin legislation, citing weaker safeguards for fraud victims, according to a Monday report.

Legal Backlash Against Stablecoin Bill?

New York Attorney General Letitia James and four district attorneys signed a letter criticizing the GENIUS Act, reported CNN. They contend that the law lends an unwarranted sense of “legitimacy” to stablecoins, while allowing companies that issue these stablecoins to "avoid significant regulatory requirements” needed to combat financial crimes.

Benzinga sought confirmation from the New York Attorney General’s office on the report.

The prosecutors reportedly said that these requirements are vital in the fight against financing terrorism, drug trafficking and money laundering.

Circle’s Response

Dante Disparte, Circle’s Chief Strategy Officer, told Benzinga that the company has “always prioritized financial integrity and advancing U.S. and global regulatory standards” for stablecoins and would continue to do so once the GENIUS Act is in full effect.

Tether, the issuer of the world’s largest stablecoin, didn’t immediately return Benzinga’s request for comment.

The Potential Risks Critics Fear From GENIUS Act

The GENIUS Act, which was signed into law by President Donald Trump last year, has been touted by some as a game-changer for the global monetary system.

The legislation requires stablecoins to be fully backed by dollars or equivalent liquid assets, mandates annual audits for large issuers, and introduces new standards for foreign stablecoin issuance. 

Price Action: Circle's stock rose 1.43% in after-hours trading after closing 7.93% lower at $58.86 during Monday’s regular trading session, according to data from Benzinga Pro.

The stock maintained a weaker price trend over the short, medium, and long terms, according to Benzinga’s Edge Stock Rankings.

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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