Stablecoin Bill Divides Lawmakers as Senator Warren Warns of Trump-Linked Conflicts of Interest

The passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, identified as the GENIUS Act, has drawn sharp strains in Washington, with reward from trade leaders and regulators clashing in opposition to rising warnings from lawmakers, particularly Senator Elizabeth Warren.

The invoice was signed into law by President Donald Trump on July 18, 2025; the GENIUS Act marks the United States’ first federal framework devoted to regulating cost stablecoins.

The White House hailed the laws as a “historic second for crypto and the U.S. greenback,” emphasizing that it might place the nation as a frontrunner in digital property.

The legislation introduces strict guidelines on who can difficulty stablecoins, how reserves should be backed, and the disclosures required to make sure transparency.

It creates a licensing pathway below the Office of the Comptroller of the Currency (OCC) for each banks and certified non-banks, whereas excluding algorithmic or DeFi-native tokens for additional examine.

Supporters have described it as a long-awaited transfer to deliver authorized readability to a market that had operated in a regulatory grey zone for years.

Crypto Leaders Call GENIUS Act “Beginning of a New Regulatory Era”

Executives from main digital asset companies have largely praised the legislation. Ian De Bode, chief technique officer at Ondo Finance, called it “the beginning of a new regulatory era,” citing bipartisan cooperation that he believes will enhance institutional participation in crypto markets.

He additionally famous that Patrick McHenry, former chair of the House Financial Services Committee and present vice chair of Ondo Finance, performed a key function in advancing the invoice.

Similarly, Bitpanda deputy CEO Lukas Enzersdorfer-Konrad described the legislation as a “breakthrough” that has renewed market optimism, pointing to a latest rally in Bitcoin and altcoins.

Tae Oh, CEO of Gluwa, emphasised that the framework “indicators a robust dedication to accountable innovation, shopper safety, and long-term trade development.”

Federal regulators have echoed these sentiments. SEC Chair Paul Atkins called the GENIUS Act a “seminal step” for U.S. financial regulation, acknowledging that whereas many challenges stay, the legislation supplies much-needed readability.

Treasury Secretary Scott Bessent went additional, describing it as “essential” for maintaining American leadership in digital finance, predicting that stablecoins will broaden greenback entry globally and enhance demand for U.S. Treasuries.

However, the reward has not been unanimous. In latest weeks, main banking associations and lawmakers have voiced rising considerations about potential loopholes and systemic dangers inside the new legislation.

Warren vs. Trump’s Treasury: Stablecoin Law Sparks $6.6 Trillion Banking Panic

On August 13, a coalition of main U.S. banking commerce teams, together with the American Bankers Association, Bank Policy Institute, and Financial Services Forum, urged Congress to tighten the rules.

They warned that the GENIUS Act’s language might permit stablecoin issuers or affiliated entities to not directly pay yield to holders, regardless that the legislation explicitly bans issuers from doing so.

Such an association, they cautioned, might divert as much as $6.6 trillion in deposits from conventional banks into stablecoins, probably driving up borrowing prices for households and companies.

The most forceful criticism, nonetheless, has come from Senator Elizabeth Warren, the highest Democrat on the Senate Banking Committee.

In a letter to Treasury Secretary Bessent, Warren accused the administration of overlooking corruption and conflicts of curiosity tied to Trump-linked allies concerned in shaping the laws.

She argued that Treasury should insulate its proposed guidelines from these influences and strengthen oversight to stop “rogue states, drug cartels, terrorists, and criminals” from exploiting stablecoins to maneuver illicit funds.

Warren Blasts GENIUS Act as “Dangerous and Deregulatory,” Says Treasury Ignoring Risks to Everyday Americans

Warren additionally warned that the GENIUS Act fails to supply enough shopper protections, leaving customers weak to scams and losses in stablecoin transactions.

Unlike conventional banking apps such as Venmo, she mentioned, the legislation lacks provisions guaranteeing that buyers obtain the identical safeguards or that the Consumer Financial Protection Bureau (CFPB) retains enforcement energy.

She additional criticized the invoice’s failure to stop Big Tech and huge conglomerates from issuing personal currencies, saying it dangers permitting firms to “take management over the cash provide.”

Warren added that the absence of stronger monetary stability guardrails might make “harmful runs and calls for for bailouts” extra doubtless, urging Treasury to difficulty clear steering barring the use of the Exchange Stabilization Fund (ESF) or any Federal Reserve 13(3) emergency facility to rescue the stablecoin trade.

In addition, the senator referred to as for the Treasury to reject any reciprocity settlement with El Salvador that might permit Tether, the world’s largest stablecoin issuer, to bypass U.S. compliance obligations below the GENIUS Act.

“The Treasury has a chance to handle these dangers by way of bipartisan negotiations over broader crypto laws,” Warren wrote, urging the division to behave swiftly to shut regulatory gaps and strengthen enforcement.

She also warned back in August that the present crypto framework might ‘blow up’ the U.S. financial system whereas blasting GENIUS Act and Trump’s cryptocurrency enterprise ventures as corruption dangers.

Despite these divisions, the GENIUS Act stays a milestone in U.S. digital asset regulation. Supporters view it as a basis for mainstream adoption, whereas critics argue it leaves key vulnerabilities unaddressed.

Former White House Crypto Council govt Bo Hines, who helped craft the laws earlier than joining Tether as a strategic advisor, described the GENIUS Act as the “first piece of the puzzle” in modernizing America’s financial system.

He credited the White House’s fast tempo in passing the invoice, saying it was designed to make U.S. cost rails “truthful and strong.”

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