Elizabeth Warren Warns GENIUS Act Reflects Industry Influence Echoes 2008 Deregulation Risks

Elizabeth Warren, the Massachusetts senator and long-time critic of the cryptocurrency industry, has issued a stern warning against the recently enacted GENIUS Act, asserting that the American public will ultimately face the consequences of a regulatory framework she claims was shaped by industry interests. The legislation, signed into law by Donald Trump, aims to establish a legal structure for stablecoins, requiring issuers to meet specific standards while balancing innovation and oversight [3]. However, Warren argues that the act reflects a pattern of industry influence on policymaking, a trend she compares to the deregulatory practices that contributed to the 2008 financial crisis.

Warren’s critique centers on the Commodity Futures Modernization Act of 2000, which she describes as a cautionary tale. That law, which left over-the-counter derivatives largely unregulated, became a focal point for analysts and commentators in the aftermath of the 2008 crisis, with many attributing its lax oversight to the proliferation of risky financial instruments like credit default swaps [5]. By drawing this historical parallel, Warren implies that the GENIUS Act may similarly prioritize industry convenience over systemic stability. She emphasized that when financial regulations are crafted by the industries they aim to govern, the result is often a framework that benefits a select few at the expense of broader economic resilience [2].

The senator’s concerns are amplified by her view of the crypto sector’s political clout. Warren highlighted the industry’s aggressive lobbying efforts, describing them as unprecedented in Washington. This influence, she argues, has enabled the industry to effectively draft its own legislation—a practice she deems dangerously shortsighted. “If we’re going to ratify a sweeping crypto regulatory framework, we need to get it right,” she stated in an interview with Vanity Fair [1]. Her remarks underscore a broader skepticism about the potential for stablecoins to be exploited by large corporations, including the use of consumer data and competitive advantages to undermine market fairness [5].

The GENIUS Act’s provisions, which include allowing stablecoins to be counted as assets in mortgage risk assessments, have drawn additional scrutiny. Critics, including Warren, question whether the bill’s focus on innovation adequately addresses risks such as bank runs, particularly in light of the Silicon Valley Bank collapse in 2023. Sergi Basco, a professor at the University of Barcelona, echoed these concerns in an op-ed for The Conversation, noting that the law’s implications could create a false sense of security. By granting stablecoins a presumption of safety, he warned, the legislation might mislead the public into assuming all issuers meet rigorous standards, even as regulatory gaps persist [5].

Warren’s criticisms extend beyond the GENIUS Act to Trump’s broader crypto policies. She has accused the of dismantling enforcement mechanisms, including the disbanding of the Department of Justice’s crypto enforcement unit and urging the SEC to ease regulatory pressure. These actions, she argues, exacerbate the risks of a poorly monitored market. Meanwhile, the senator has reiterated her longstanding warnings about the potential for stablecoins to be weaponized by tech and business elites, enabling data exploitation and anticompetitive practices [5].

The debate over the GENIUS Act reflects a wider tension in U.S. financial policy between fostering innovation and ensuring accountability. Proponents of the legislation argue it promotes transparency and reduces risks by standardizing stablecoin issuance. However, Warren and others stress that without robust oversight, the law could inadvertently create new vulnerabilities. The House of Representatives must still approve the bill, and its implementation is likely to face ongoing scrutiny from both political factions and industry stakeholders [7].

Sources:

[1] [Elizabeth Warren Says Trump Is Turning the White House Into a Crypto Cash Machine](https://www.vanityfair.com/news/story/elizabeth-warren-says-trump-is-turning-the-white-house-into-a-crypto-cash-machine?srsltid=AfmBOooeLl203BwqgT0wfMHs1FU2gkPksjqJSMA4s1JsyeESRuoeJ9fe)

[2] [Elizabeth Warren On Democrats' Support Of Crypto Bills](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] [GENIUS Act explained: How it will affect the crypto industry](https://www.techtarget.com/whatis/feature/GENIUS-Act-explained-How-it-will-affect-the-crypto-industry)

[4] [What to know about the GENIUS Act, a crypto regulation bill](https://www.goodmorningamerica.com/news/story/genius-act-crypto-regulation-bill-121981442)

[5] [Elizabeth Warren: American People Will ‘Pay the Price’ for GENIUS Act](https://decrypt.co/331818/elizabeth-warren-pay-the-price-genius-act)

[6] [Democrats are probing Trump's housing chief over a plan ...](https://www.aol.com/democrats-probing-trumps-housing-chief-140137482.html)

[7] [The GENIUS Act Just Launched A New Economy; SMX ...](https://www.barchart.com/story/news/33642548/the-genius-act-just-launched-a-new-economy-smx-security-matters-was-already-there)