Elizabeth Warren Warns GENIUS Act's Bipartisan Approval Risks 2008-Level Deregulation As Stablecoin Market Grows $4B

Senator Elizabeth Warren (D-Mass.) has escalated her criticism of the recently enacted GENIUS Act, a legislative measure designed to establish a regulatory framework for stablecoins. In her remarks, Warren warned that the law, signed by President Donald Trump, prioritizes the interests of the cryptocurrency industry over public safeguards, potentially endangering U.S. financial stability. She drew parallels between the Act and the 2008 financial crisis, highlighting the dangers of unregulated speculative practices in the stablecoin market [1].

Warren’s concerns center on the Act’s oversight mechanisms for stablecoins, which are designed to maintain stable value against fiat currencies like the U.S. dollar. She argued that the legislation fails to address systemic risks, such as liquidity crises and fraud, by allowing the crypto industry to shape its own regulatory framework. “When Washington runs on industry, only a handful of people get rich, and the rest of the American people pay the price,” she stated, emphasizing her view that financial regulation has become “a town where money talks” [2]. The Act’s bipartisan support, with 18 Democrats and 102 House members crossing party lines to endorse it, has further intensified Warren’s critique [3].

Academic and institutional analysts have echoed Warren’s warnings. Economist Sergi Basco from the University of Barcelona noted that the law could create a misleading perception of stability in the stablecoin market. “If people see ‘reputable companies’ issuing stablecoins, they may assume that all such coins are equally reliable,” Basco explained, cautioning that insufficient oversight could lead to bank runs even if coins are nominally backed by U.S. government bonds [4]. Warren specifically cited the Trump family’s crypto ventures, including the USD1 stablecoin and the Official TRUMP meme coin, as evidence of conflicts of interest. While Trump has denied financial ties to these projects, his reported earnings from World Liberty Financial—a firm linked to USD1—have drawn scrutiny [5].

The Act’s rapid passage has sparked debates about regulatory integrity. Critics argue that the legislation’s drafting, influenced by crypto industry lobbying, lacks robust safeguards to address fundamental vulnerabilities. Warren reiterated that “strong” crypto legislation is necessary but warned against hasty approvals. “We’ve seen the consequences of deregulation before,” she said, referencing the 2008 crisis as a cautionary example [6].

The financial sector has responded with mixed signals. Banks are already entering the $264 billion stablecoin market under the Act’s framework, which has driven $4 billion in growth since its enactment [7]. However, Warren’s warnings highlight tensions between fostering innovation and mitigating systemic risks. As institutions capitalize on the Act’s provisions, regulators and lawmakers face pressure to balance industry demands with safeguards for financial stability.

Warren’s criticism aligns with broader skepticism about the Trump administration’s crypto-friendly policies. Her focus on the Act’s potential to “transform the White House into a cryptocurrency cash machine” underscores concerns about regulatory capture and the entanglement of political power with private interests [8]. While proponents argue the Act promotes innovation and economic growth, detractors stress the need for rigorous oversight to prevent a repeat of past financial crises.

Sources:

[1] [title: Elizabeth Warren Warns GENIUS Act Reflects Industry Influence Echoes 2008 Deregulation Risks] [url: https://www.ainvest.com/news/elizabeth-warren-warns-genius-act-reflects-industry-influence-echoes-2008-deregulation-risks-2507/

[2] [title: Elizabeth Warren On Democrats' Support Of Crypto Bills] [url: https://www.benzinga.com/news/politics/25/07/46626113/elizabeth-warren-on-democrats-support-of-crypto-bills-long-bipartisan-tradition-of-helping-out-industry-instead-of-working-for-average-american

[3] [title: Elizabeth Warren On Democrats' Support Of Crypto Bills] [url: https://www.benzinga.com/news/politics/25/07/46626113/elizabeth-warren-on-democrats-support-of-crypto-bills-long-bipartisan-tradition-of-helping-out-industry-instead-of-working-for-average-american

[4] [title: Elizabeth Warren: "GENIUS Act Will Cost Americans Dear..."] [url: https://bloomingbit.io/en/feed/news/93637

[5] [title: Elizabeth Warren On Democrats' Support Of Crypto Bills] [url: https://www.benzinga.com/news/politics/25/07/46626113/elizabeth-warren-on-democrats-support-of-crypto-bills-long-bipartisan-tradition-of-helping-out-industry-instead-of-working-for-average-american

[6] [title: Elizabeth Warren On Democrats' Support Of Crypto Bills] [url: https://www.benzinga.com/news/politics/25/07/46626113/elizabeth-warren-on-democrats-support-of-crypto-bills-long-bipartisan-tradition-of-helping-out-industry-instead-of-working-for-average-american

[7] [title: Banks Rush Into $264 Billion Stablecoin Market After Trump Signs New Law] [url: https://coincentral.com/banks-rush-into-264-billion-stablecoin-market-after-trump-signs-new-law/

[8] [title: Elizabeth Warren On Democrats' Support Of Crypto Bills] [url: https://www.benzinga.com/news/politics/25/07/46626113/elizabeth-warren-on-democrats-support-of-crypto-bills-long-bipartisan-tradition-of-helping-out-industry-instead-of-working-for-average-american