Warren Warns GENIUS Act Risks Repeat of 2008 Crisis with Deregulated Crypto

Senator Elizabeth Warren and other critics of the newly passed GENIUS Act have raised concerns over its potential to create systemic risks similar to those that led to the 2008 financial crisis. In a July 2025 interview with Vanity Fair, Warren warned that the law, heavily influenced by the cryptocurrency industry, prioritizes the interests of powerful actors over public welfare. She specifically highlighted the bill's resemblance to the 2000 Commodity Futures Modernization Act (CFMA), which she argues contributed to the unregulated derivatives market that precipitated the 2008 crash [1].

Warren pointed to the broad deregulatory nature of the GENIUS Act and its potential to enable self-serving behavior by high-ranking officials, including the President and Vice President. These individuals are now legally permitted to issue stablecoins, raising concerns about conflicts of interest and lack of oversight. The Trump family, for example, is already deeply involved in multiple crypto ventures, including the launch of stablecoins and memecoins. Forbes estimated in June 2025 that Donald Trump’s earnings from crypto projects alone reached $1 billion, surpassing profits from all other business ventures [1].

The legislation also disbands the Department of Justice’s cryptocurrency enforcement unit, reducing independent oversight of the president’s actions. Warren criticized this move, stating it marks the first time a U.S. president has signed a law placing himself in charge of regulators who could influence the value of his personal wealth. The implications, she argues, could be dire for the American public [1].

Warren’s comparison to the CFMA is particularly striking. The CFMA was crafted with little regulatory oversight for over-the-counter derivatives, leading to a surge in complex financial instruments that eventually destabilized the market. Critics of the GENIUS Act fear a similar scenario could unfold with stablecoins. If major corporations like Amazon or Walmart issue their own branded stablecoins, the market could face unprecedented fragmentation, interoperability issues, and confusion. Economist Barry Eichengreen has warned that the bill could regress the U.S. financial system to the pre-Civil War era of free banking, where banks issued their own currencies with little oversight [2].

The potential risks extend beyond confusion. In the event of a large stablecoin issuer’s collapse, the GENIUS Act grants stablecoin holders priority in accessing the underlying assets—such as U.S. Treasury bills—over other creditors. This could force rapid asset sales in a crisis, potentially undermining the U.S. dollar and broader economic stability [2].

Some critics, like Mark Hays of Americans for Financial Reform, argue the bill lacks sufficient risk management measures. The exemptions for the president and vice president in the law further exacerbate concerns about accountability and transparency [3].

Shawn Young, Chief Analyst at MEXC Research, noted that while Warren’s comparison is historically relevant, the GENIUS Act does not deregulate the market in the same way as the CFMA. Instead, it provides clearer regulatory guidelines for crypto assets. However, Young also emphasized that the absence of strong anti-corruption measures in the bill leaves room for exploitation and erodes public trust [4].

The debate underscores the broader challenge of balancing innovation with regulation in the crypto space. While the GENIUS Act aims to foster growth by clarifying the legal status of digital assets, it leaves significant gaps in oversight, particularly regarding the conduct of high-level officials. The success of the law in preventing another financial crisis remains uncertain, but Warren’s warning serves as a reminder of the dangers that can arise when legislative power is ceded to industry actors without sufficient safeguards [1].

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[1] https://coinmarketcap.com/community/articles/688a28dd1c29df0fa3641d47/