- Senator Warren says the GENIUS Act leaves substantial gaps in oversight of stablecoins, potentially endangering financial stability.
- She urges the Treasury to address corruption and conflicts of interest arising from Trump-era crypto ventures.
- Significant gaps in stablecoin regulation could expose consumers, taxpayers, and the wider financial system to potential abuse.
Senator Elizabeth Warren has criticised the GENIUS Act as a ‘light-touch’ framework that leaves major gaps in oversight for stablecoins and crypto banks.
In a letter to Treasury Secretary Scott Bessent, Warren urged the Treasury Department to close loopholes linked to conflicts of interest and to introduce rules that protect consumers and financial stability. She said the law gives crypto-focused firms too much leeway under what she described as a “light regulatory approach” for stablecoin issuers.
The GENIUS Act, passed earlier this year, requires stablecoins to be fully backed by U.S. dollars or similarly liquid assets and mandates annual audits for issuers with market capitalisations above US$50 billion (AU$76.6 billion). While supporters view the law as a step toward clarity for the digital asset sector, Warren said its current form fails to safeguard the financial system against potential abuse.
She warned that the Act lacks strong protections against corruption and conflicts of interest tied to President Trump’s crypto ventures.
I expect that Treasury will propose specific steps for addressing corruption it implements the GENIUS Act, explain how it has insulated its proposed rules from conflicts of interest, and advocate for a meaningful legislative solution as Congress considers setting the rules for the broader structure of the crypto market.
Senator Elizabeth WarrenRelated: US Treasury Exempts Crypto From Unrealised Gains Tax in Major Industry Win
Preventing Foreign Exploitation
Raising broader national security concerns, she cautioned that stablecoins could be used to move funds for rogue states, cartels, terrorists, and criminal networks. To address this, Warren said the Treasury should require foreign issuers to comply promptly with lawful orders and prevent bad actors from exploiting timing loopholes.
She further urged the Treasury to make clear it will not use the Exchange Stabilisation Fund or authorise Federal Reserve emergency lending to support the stablecoin industry, and to reject reciprocity deals with El Salvador that could weaken US oversight.
Warren’s letter arrives as federal agencies begin implementing the GENIUS Act and as lawmakers debate broader crypto market reforms.
Related: El Salvador Greenlights Bitcoin Banking for Major Financial Institutions
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