- New York’s attorney general has condemned the proposed GENIUS Act, warning it could undermine consumer protections
- The legislation has been introduced to limit state-level regulation of digital assets, drawing backlash from several state officials
- Letitia James argues the bill would weaken states’ ability to pursue crypto-related fraud and misconduct
The much-vaunted GENIUS Act, aimed at streamlining digital asset regulation, has come under fire from New York Attorney General Letitia James, who has accused it of stripping away critical state oversight. The bipartisan Guarding Against Emerging Network Improprieties and Unfair Strategies Act is designed to centralize crypto regulation under federal agencies, but opponents, including James, fear it could leave investors vulnerable. James and other state officials argue that the bill would erode long-standing protections and hamper enforcement actions against digital asset fraud, undermining any benefits that might derive from it.
State vs. Federal Authority
In a letter to congressional leaders last week, Attorney General James expressed “deep concern” over the legislation, warning that it would “preempt strong state laws that have been critical in protecting consumers from deceptive and abusive practices in the crypto industry.” James emphasized that New York’s BitLicense framework and other oversight tools have played a vital role in safeguarding investors and prosecuting bad actors, adding that the GENIUS Act would “tie the hands of state regulators just as we are beginning to hold this lawless industry accountable.”
The GENIUS Act, introduced by Reps. Trey Hollingsworth (R-IN) and Darren Soto (D-FL), aims to streamline crypto oversight by vesting primary regulatory authority with key federal agencies. Proponents argue this would provide clarity for companies and reduce the compliance burden from a patchwork of state laws, but critics say the move favors industry players at the expense of public protection, particularly in jurisdictions like New York, which have led the charge on enforcement.
GENIUS Act on the Way to Approval
In mid‑June, the Senate overwhelmingly approved the GENIUS Act by a vote of 68–30, granting it formal passage to the House for further review and potential alignment with its STABLE Act counterpart.
While many digital asset firms have welcomed the bill as a step toward clearer national standards, others clearly remain cautious; industry analysts note that support for federal preemption often reflects frustration with the strict licensing and compliance rules in states like New York.
Still, with the crypto landscape evolving rapidly, the debate over who should lead regulation—states or the federal government—shows no signs of cooling. As Attorney General James put it: “We cannot allow Washington to invite another wave of fraud by sidelining the states.”
