Law Meets Ledger: GENIUS Act Under Fire in New York

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In the grand theatre of legislative maneuvering, as Washington’s lawmakers prance about with their CLARITY Act, the esteemed prosecutors of New York have turned their discerning gaze to a matter already enshrined in statute-the GENIUS Act. One might imagine such a noble endeavor would inspire universal admiration, yet it appears some find fault in its very foundation.

At the helm of this critical chorus stands Attorney General Letitia James, flanked by a quartet of district attorneys, including the ever-punctilious Alvin Bragg. They have penned a letter to Congress, deeming the GENIUS Act-ostensibly a paragon of stablecoin regulation-a woeful failure in its duty to shield the innocent from financial mischief. With the gravity of a society matron critiquing a poorly arranged ballroom, they argue the law bestows an “imprimatur of legitimacy” upon stablecoins while allowing their issuers to evade the very obligations that might curb the nefarious activities of terrorism financiers, drug traffickers, and the most odious of all, cryptocurrency scoundrels.

A Most Ominous Omission

The prosecutors’ chief lament lies not in what the GENIUS Act contains, but in what it neglects-namely, the requirement that stablecoin issuers return ill-gotten gains to their rightful victims. To omit such a provision, they contend, is to invite the most unscrupulous behavior, akin to hosting a dinner party without a single dish for the guests. One imagines the stablecoin magnates might chuckle at such oversight, secure in the knowledge that their legal counsel has crafted a delightful loophole.

Should these firms elect to retain stolen assets rather than assist law enforcement in restitution, the prosecutors warn, they may find themselves emboldened by the very law meant to restrain them. A most curious state of affairs, where legislation serves as a shield rather than a sword.

Tether’s Haughty Dismissal

The letter singles out Tether (USDT) and Circle (USDC), the titans of the stablecoin realm, accusing them of obstructing efforts to recover illicit funds. These companies, it is alleged, wield their power inconsistently, much like a dandy who doles out favors only when the fashion pleases him. The prosecutors further assert that victims of fraud, once their assets are converted into USDT, face a fate as hopeless as a debutante spurned at her first ball-left with little recourse and less hope of recovery.

Tether, ever the paragon of hauteur, has dismissed these accusations with a stiff upper lip, declaring their zero-tolerance policy for criminality. One might suppose they are merely ensuring their reputation remains untarnished, even as they dance with the miscreants.

Circle’s Publicly Traded Pride

Circle, the second-largest stablecoin issuer and a proud New Yorker, faces even sharper scrutiny. Though they present themselves as a valiant ally in the fight against financial crime, the prosecutors argue their policies are “significantly worse than those of Tether.” When Circle does deign to freeze assets linked to fraud, they retain control, earning interest while the victims await justice. It is a most convenient arrangement, allowing them to profit from the very misfortunes they claim to abhor.

Circle’s chief strategy officer, Mr. Disparte, has responded with the vigor of a man defending his family’s honor, insisting their commitment to financial integrity is unwavering. One might wonder, however, if such declarations will prove as enduring as a summer romance.

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2026-02-04 10:33