Senator Elizabeth Warren has expressed significant concerns regarding the current form of the GENIUS Act, a proposed stablecoin bill. Warren, a Democrat from Massachusetts and the Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, emphasized that without revisions, the bill could jeopardize Americans' finances, the economy, and national security.
Warren's remarks highlighted several key issues with the bill. She noted that "the bill ignores basic consumer protections" that apply to other financial products in America. For instance, if a person is scammed while sending a U.S. dollar through PayPal, existing regulations allow for potential recovery of funds. However, under this bill, similar protections would not extend to transactions involving stablecoins.
The senator also raised alarms about national security implications. She stated that "without changes, this bill will supercharge the financing of terrorism," enabling sanctions evasion by countries like Iran and North Korea and potentially facilitating international criminal activities such as drug trafficking and child pornography sales.
Additionally, Warren pointed out potential threats to financial stability. The bill allows stablecoin issuers to invest in risky assets—assets similar to those bailed out during past financial crises—posing a risk of future bailouts at taxpayers' expense.
Furthermore, Warren criticized provisions allowing large commercial companies to create their own currencies. She mentioned that this could give individuals like Elon Musk undue economic power typically reserved for public banks: "This means that this bill gives Elon Musk the chance to issue his own X Money currency."
Warren assured that suggested fixes would neither end stablecoins nor hinder innovation but rather apply consistent rules across financial markets: "Not one of these fixes would be hard to put in place."
She concluded by emphasizing her readiness to support or oppose the bill based on whether necessary amendments are made: "If we can find compromises on these issues today, I’m prepared to support this bill. If not, I will work to defeat it."
In addition to discussing the GENIUS Act, Warren expressed concerns about another piece of legislation—the FIRM Act—which she believes could undermine regulatory efforts aimed at maintaining banking system safety.