Regulatory framework leaves consumers exposed to unacceptable risks
WASHINGTON, D.C. – A bill approved by the House today that establishes a regulatory framework for stablecoins leaves consumers exposed to unacceptable risk and uncertainty, according to Consumer Reports. Stablecoins are a type of cryptocurrency where the value of the digital asset is tied to a government-issued currency, exchange-traded commodity, or another cryptocurrency. CR had urged lawmakers to oppose the Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 (GENIUS) Act unless it was substantially strengthened.
““Stablecoins should help consumers—not put them in harm’s way,” said Chuck Bell, advocacy program director at Consumer Reports. “Consumers increasingly encounter stablecoins in apps, wallets, and digital platforms—and they deserve clear rules and real protections,” said Chuck Bell, advocacy program director at Consumer Reports. “The GENIUS Act does not provide the safeguards that consumers reasonably expect when they use products that function like digital cash.”
Bell added, “Unlike traditional financial products, stablecoins are currently not subject to consistent protections like deposit insurance, guaranteed redemption rights, or dispute resolution mechanisms. The GENIUS Act does not fully close these gaps.”
Consumer Reports key concerns with the GENIUS Act:
- No Guarantee of Timely Redemption: The bill requires that issuers disclose redemption policies but does not ensure that consumers can redeem their stablecoins for dollars within a reasonable or enforceable timeframe—raising the risk of delayed access to funds in a crisis.
- No Federal Insurance or Redress for Losses: The bill does not require reserve insurance or provide any federal backstop for consumers in the event of a platform failure or hack.
- Limited Audit Transparency: Monthly self-reported attestations by executives are not a substitute for independent, third-party audits. Consumers have no reliable way to verify whether reserves exist or are secure.
- Oversight Limited to OCC: The bill concentrates oversight power in the Office of the Comptroller of the Currency (OCC), without ensuring the Consumer Financial Protection Bureau (CFPB) or Federal Trade Commission (FTC) can enforce critical consumer protection laws.
- No Prohibition on Big Tech or Commercial Issuers: The GENIUS Act leaves open the possibility for large technology companies or retailers to issue stablecoins without adequate banking regulation or privacy guardrails, raising risks related to market power, surveillance, and consumer choice.
- Lack of Explicit Consumer Protections: The bill does not clearly apply the Electronic Fund Transfer Act, UDAAP provisions, or other core financial safeguards that protect consumers from fraud, error, or unauthorized transactions.
Media Contact: Michael McCauley, michael.mccauley@consumer.org