TLDR
- Elizabeth Warren criticized the GENIUS Act for lacking strong regulatory safeguards.
- She urged the Treasury Department to close gaps in the law that could harm financial stability.
- Warren raised concerns about Trump family ties to World Liberty Financial USD.
- She warned that political influence could weaken public trust in stablecoin regulations.
- Warren cited the Paxos minting error as proof of operational risks in the crypto industry.
Sen. Elizabeth Warren has strongly criticized the newly enacted GENIUS Act, citing financial risks and Trump-linked conflicts of interest. She urged the Treasury Department to close regulatory gaps and strengthen protections for consumers and the economic system. Warren’s call came in a formal letter to Treasury Secretary Scott Bessent, first reported by Punchbowl News.
GENIUS Act Draws Fire for Light Regulation
Elizabeth Warren described the Guiding and Establishing Innovation for U.S. Stablecoins Act (GENIUS) as a “light-touch regulatory framework for crypto banks.” She said the law exposes the U.S. financial system to potential threats due to insufficient oversight. Warren insisted Treasury must act swiftly to fill the law’s gaps.
The law requires stablecoins to be fully backed by U.S. dollars or liquid assets and mandates annual audits for major issuers. However, Elizabeth Warren argued these measures are not enough to protect taxpayers and ensure national security. She urged the Treasury to implement the law strictly and transparently.
Key federal agencies are still working on implementing the GENIUS Act, which former President Donald Trump signed into law in July. While the legislation passed both chambers of Congress, critics warn it leaves serious loopholes. Elizabeth Warren emphasized that regulatory enforcement must match the risks posed by the growing crypto market.
Trump-Linked Stablecoin Sparks Conflict Concerns
Elizabeth Warren raised red flags about World Liberty Financial USD, a Trump-family-backed stablecoin now among the world’s largest. She argued that conflicts of interest involving Trump’s ties to the crypto sector undermine public trust. In her letter, Warren demanded Treasury explain how it would handle these issues.
According to Bankrate, World Liberty Financial USD holds a significant share in the stablecoin market. Elizabeth Warren warned that such political entanglements could influence regulation and compromise financial stability. She stated, “Treasury must address corruption risks and propose safeguards in its rulemaking.”
Warren also said the GENIUS Act lacks protections against insider influence during its implementation. She asked Treasury to insulate rules from any political or corporate interference. Furthermore, she called on the department to back stronger legislative solutions under consideration in Congress.
Elizabeth Warren Urges Action After Paxos Error
Elizabeth Warren highlighted Paxos’ recent $3 trillion PYUSD minting error as proof of operational dangers in the stablecoin sector. She stated that the incident highlights significant risks to market integrity and financial stability. Paxos later called the error a technical issue, but concerns remain.
Warren warned that such failures could shake confidence and destabilize the financial system if left unaddressed. She asked Treasury to clarify how it plans to prevent similar events in the future. Elizabeth Warren insisted the agency must disclose what tools or authority it needs to manage these threats.
She emphasized that GENIUS alone cannot encompass the broader risks associated with stablecoins. Elizabeth Warren recommended that ongoing bipartisan talks in Congress should focus on regulating the broader crypto industry. She noted, “Treasury must advocate for meaningful legislation that ensures market integrity and consumer protection.”
The post Elizabeth Warren Urges Treasury to Address GENIUS Act Weaknesses appeared first on Blockonomi.
Source: https://blockonomi.com/elizabeth-warren-urges-treasury-to-address-genius-act-weaknesses/