NEW YORK, April 10, 2025 – New York Attorney General Letitia James has issued an urgent call to congressional leaders in a letter dated April 8, 2025, and sent today, pressing for a federal regulatory framework to govern the fast-growing cryptocurrency industry. Addressed to Senate Majority Leader John Thune, Senate Minority Leader Chuck Schumer, House Speaker Mike Johnson, and House Minority Leader Hakeem Jeffries, the letter, reported by Lumyna Crypto News, highlights the need to combat fraud, criminal activity, and financial instability in the $3 trillion global crypto market. Below, we break down the key points of James’ proposal and its implications for cryptocurrency regulation, Bitcoin adoption, and U.S. economic stability.
Bitcoin Threatens U.S. Dollar Dominance, Warns James
At the core of James’ argument is the assertion that Bitcoin’s widespread adoption jeopardizes the U.S. dollar’s status as the world’s leading currency. She urged lawmakers to “onshore” stablecoins—cryptocurrencies pegged to assets like the dollar—to reinforce American financial dominance. By requiring stablecoins to be backed one-to-one by U.S. dollars or treasuries and issued by U.S.-regulated entities, James aims to ensure that digital assets bolster, rather than undermine, the dollar’s global standing. She also took a firm stance against including cryptocurrencies in retirement accounts, citing significant risks to American investors.
Real-World Crypto Risks: From Piano Teachers to Luna/Terra
James’ letter spotlighted the human and economic toll of an unregulated crypto market. She cited the case of a New York piano teacher whose investment in digital assets was completely wiped out, underscoring the vulnerability of retail investors. Another stark example is the collapse of Luna/Terra, whose South Korean founder now faces U.S. federal charges for a fraud that erased $40 billion in value. These incidents, James argued, demonstrate the urgent need for cryptocurrency regulation to protect consumers from fraud and financial ruin.
Cryptocurrency Drains American Economy, Says AG
Beyond individual losses, James warned that the crypto industry is siphoning funds away from the U.S. economy. She criticized the push to “unbank” Americans, a trend encouraging people to ditch traditional banks for digital currencies falsely marketed as safer. This shift, she said, pulls dollars from financial institutions that reinvest in American communities, businesses, and infrastructure. Instead, those funds flow into a global crypto ecosystem, with profits often benefiting foreign entities—like Chinese Bitcoin mine owners who funnel earnings offshore. “American dollars should fuel American industry—agriculture, infrastructure, security, and energy independence—not enrich foreign adversaries,” James wrote.
Stablecoin Concerns: Tether’s $94.5 Billion Treasury Holdings
A significant focus of the letter was the role of stablecoins, particularly those not backed by U.S. dollars. James pointed to Tether, the largest stablecoin issuer, which holds $94.5 billion in U.S. treasury bills—equivalent to 55% of the daily trading volume. Having relocated its headquarters to El Salvador, Tether’s massive holdings could destabilize markets if redemptions spike during crypto downturns, potentially sparking “run on the bank” scenarios. James’ office previously held Tether accountable for misrepresenting reserves and hiding $850 million in losses, a case she hopes will inform federal stablecoin regulation.
Jobs and Economic Impact: Crypto Falls Short
Despite its $3 trillion valuation, the cryptocurrency industry has failed to deliver meaningful economic benefits, James argued. At its 2022 peak, crypto-related job postings accounted for less than 0.15% of U.S. openings, with many roles located offshore due to the sector’s global nature. This stands in contrast to traditional industries like manufacturing and agriculture, which provide stable, middle-class jobs. James called for policies that prioritize American economic growth over speculative digital assets.
A “Common Sense” Crypto Regulation Framework
James proposed a practical regulatory approach to balance innovation with security. Key to her plan is mandating that stablecoins be fully backed by U.S. dollars or treasuries and issued by companies under U.S. jurisdiction. This would anchor reserves in U.S.-supervised banks, reducing risks to consumers and preserving dollar dominance. “So-called stablecoins not backed by actual dollars mislead investors and destabilize markets,” she warned, advocating for transparency and oversight to protect the financial system.
Lessons from 2008: Avoiding Another Financial Crisis
Drawing a historical parallel, James likened the crypto boom to the deregulated derivatives market that triggered the 2008 Great Recession. She cautioned that the volatility and unique risks of digital assets demand proactive regulation to prevent systemic failures. “The benefits of innovation cannot compromise our national security, dominance, or safety,” she wrote, urging Congress to create a framework that safeguards U.S. borders and citizens while encouraging efficient capital allocation.
Why It Matters: Crypto Regulation and U.S. Future
As cryptocurrency continues to reshape global finance, James’ letter positions New York as a leader in the push for federal oversight. With Bitcoin, stablecoins, and digital assets increasingly influencing domestic and international markets, her call for regulation could shape the future of crypto in America. By addressing fraud, protecting investors, and securing U.S. economic interests, this proposal aims to ensure that digital innovation serves the nation—rather than undermines it.
