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Sen. Elizabeth Warren called the new GENIUS Act a “light-touch” framework for crypto banks.
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She urged the Treasury to address conflicts of interest tied to Trump-linked stablecoins.
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Warren cited Paxos’ minting error as proof of the risks stablecoins pose to financial stability.
Warren Targets the GENIUS Act
Sen. Elizabeth Warren has launched a strong critique of the Guiding and Establishing Innovation for U.S. Stablecoins Act (GENIUS), signed into law by President Donald Trump in July. In a letter to Treasury Secretary Scott Bessent, Warren called the law a “light-touch regulatory framework for crypto banks” that leaves major gaps in consumer and financial protections.
“The Treasury must ensure that stablecoins don’t blow up our financial system,” Warren wrote, urging officials to implement strict oversight measures.
Concerns Over Conflicts of Interest
Warren also raised concerns about potential conflicts involving the Trump-linked World Liberty Financial USD, now one of the world’s largest stablecoins. She demanded the Treasury propose specific measures to prevent corruption and insulate future rules from political interference.
Operational Risks and Financial Stability
Citing Paxos’ recent incident where $300 trillion PYUSD tokens were mistakenly minted, Warren warned that operational failures could trigger systemic risks. “This incident shows how technical errors in stablecoin systems can threaten financial stability,” she said.
Regulatory Gaps Still Open
Federal Reserve Governor Michael Barr recently echoed Warren’s concerns, saying the GENIUS Act leaves “regulatory holes” that agencies and states must work together to close. Warren urged Congress to strengthen upcoming crypto market structure legislation to address these shortcomings.
