- Elizabeth Warren believes the GENIUS Act is a crypto law that Americans can’t afford.
- She also accuses Trump of promoting financial instability.
- The senator compared the adoption of stablecoin regulation to the conditions that led to the 2008 crisis.
Democratic Senator Elizabeth Warren has criticized the recently passed GENIUS Act, which creates a legal framework for stablecoins, accusing the crypto industry of writing the law for itself and warning of a threat to US financial stability, according to her interview with Vanity Fair.
“When Washington runs on industry, only a handful of people get rich, and the rest of the American people pay the price,” Warren said.
The GENIUS Act, signed by US President Donald Trump, sets the rules for the issuance and trading of stablecoins, which has already attracted interest from banks and large retailers.
While Warren acknowledged the need for cryptocurrency regulation, she was blunt about how it should proceed:
“If we’re going to have a large-scale regulatory framework for cryptocurrencies, we need to do it right. It’s a mistake to pit laws written by the industry against themselves.”
The senator compared the GENIUS Act to the Commodity Futures Modernization Act of 2000, which she believes contributed to the 2008 financial crisis due to the lack of proper regulation of over-the-counter derivatives:
“We’ve seen this movie before: When an industry writes laws to suit itself, it ends in disaster.”
According to Warren and economist Sergi Basco from the University of Barcelona, the law creates a false impression of the security of stablecoins:
“If people see ‘reputable companies’ issuing stablecoins, they may assume that all such coins are equally reliable,” Basco explained.
However, lack of oversight for issuers could lead to bank runs, even if coins are nominally backed by US government bonds:
“Even safe assets don’t guarantee that we’ll avoid collapse—as the Silicon Valley Bank example showed,” he added.
Warren has also repeatedly criticized Trump’s personal interest in cryptocurrencies. According to her, the president “turned the White House into a crypto ATM”:
“Trump launched a memecoin and a stablecoin that have already made him hundreds of millions. He eliminated the Justice Department’s crypto-crime unit and ordered the SEC to deregulate the industry,” she said.
It should be noted that the launch of the Trump memecoin based on Solana took place on January 18, 2025.
In addition, in June, the World Liberty Financial platform conducted a distribution of USD1 stablecoins for WLFI token holders.
The senator noted the crypto industry is spending record amounts on lobbying, comparing it to the periods of heaviest banking pressure on Congress:
“This is a city where money talks. But the way the industry has pushed this legislation is beyond anything we’ve seen before,” Warren said.
Source: https://coinpaper.com/10207/elizabeth-warren-warns-genius-act-risks-us-financial-stability