tl;dr
Senator Elizabeth Warren criticized the GENIUS Act, recently signed into law, warning it may harm the American public by allowing the crypto industry excessive influence over regulations. She compared it to the 2000 Commodity Futures Modernization Act, which contributed to the 2008 financial crisis,...
Senator Elizabeth Warren (D-MA) has strongly criticized the recently enacted GENIUS Act, warning that the American public will suffer the consequences of this pioneering cryptocurrency legislation. Signed into law by President Donald Trump earlier this month, the GENIUS Act offers legal clarity for stablecoins and sets a regulatory framework for their issuance and trading, sparking heightened interest from financial institutions and major retailers.
In an interview with Vanity Fair, Warren acknowledged the necessity for robust crypto legislation but cautioned against rushing through industry-driven bills. She emphasized that a comprehensive crypto regulatory framework must be carefully crafted to avoid repeating past mistakes. Warren highlighted the unprecedented lobbying influence of the crypto industry, claiming it has effectively positioned itself to draft its own laws, raising serious concerns about regulatory capture.
Drawing parallels to the 2008 financial crisis, Warren compared the GENIUS Act to the Commodity Futures Modernization Act of 2000, which left over-the-counter derivatives largely unregulated—a factor many blame for the financial meltdown. She warned that legislation written by industries themselves tends to benefit a few wealthy insiders while leaving ordinary Americans to bear the fallout.
Warren’s warnings align with viewpoints expressed by economics professor Sergi Basco from the University of Barcelona. Basco echoed concerns that the GENIUS Act may give stablecoins an undeserved aura of safety and questioned whether issuers will be sufficiently regulated to prevent bank runs. He noted that while stablecoins are theoretically backed by U.S. treasuries, fluctuations in their value don’t guarantee protection against financial contagions, citing the collapse of Silicon Valley Bank in May 2023 as a cautionary example.
The senator also criticized former President Trump’s handling of crypto regulation, particularly his disbandment of the Department of Justice’s crypto enforcement unit and public calls for the SEC to ease up on crypto-related enforcement actions. Warren has persistently voiced concerns that stablecoins could be exploited by powerful billionaires like Elon Musk, Jeff Bezos, and Mark Zuckerberg to track consumer purchases, leverage personal data, and stifle competition.