Elizabeth Warren Torches Trump’s Stablecoin Law: "A Financial Catastrophe in the Making"
Washington's crypto clash reaches boiling point as Senator Warren declares Trump's stablecoin legislation dangerously irresponsible.
Regulatory Firestorm Ignites
The Massachusetts senator didn't mince words during yesterday's Senate hearing, calling the proposed stablecoin framework "a ticking time bomb for American consumers." Her sharp critique landed just as Treasury officials began their technical review of the legislation.
Systemic Risk Concerns
Warren highlighted what she called "glaring oversight gaps" that could leave retail investors exposed during market turbulence. "We've seen this movie before with subprime mortgages," she noted, drawing parallels to past financial crises.
Political Battle Lines
The legislation's supporters counter that modernizing payment infrastructure is crucial for maintaining dollar dominance. But Warren's opposition signals a bruising legislative fight ahead—because nothing says financial innovation like watching politicians rediscover basic risk management decades too late.
The stablecoin wars have officially begun, and this battle might just determine whether crypto integration means progress or peril for mainstream finance.
Concerns Over Conflicts and Systemic Risk
Warren is urging Treasury to tighten its implementation of the law, citing “serious risks” to consumers, taxpayers, and the broader economy. Her concerns come amid growing unease over Trump’s own ties to the crypto sector – particularly World Liberty Financial USD, a stablecoin operated by Trump’s family that has become one of the largest in circulation.
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She demanded that Treasury outline how it plans to avoid conflicts of interest, close regulatory gaps, and ensure that digital currencies do not endanger the traditional financial system. Warren pointed to a recent incident involving Paxos, which mistakenly minted $3 trillion in PYUSD tokens, as proof of the potential dangers posed by operational errors in stablecoin issuance.
Broader Push for Crypto Regulation
The GENIUS Act has also drawn criticism from within the Federal Reserve. Governor Michael Barr recently said the law leaves key vulnerabilities unaddressed, urging federal and state regulators to coordinate on stricter rules.
Meanwhile, lawmakers are preparing new legislation to govern the broader crypto market, with bipartisan meetings scheduled between senators and major crypto executives. Warren says these discussions offer Treasury a chance to correct the GENIUS Act’s weaknesses before larger market-structure reforms take shape.
“The Treasury must make sure stablecoins don’t become the next financial crisis trigger,” she wrote, pressing the administration to pursue stronger consumer protections and transparency measures across the crypto landscape.
