Sen. Warren: GENIUS Act to Lead to 'Financial Meltdown'

Sen. Elizabeth Warren, D-Mass., warned from the Senate floor on Monday that the GENIUS Act — which would tie stablecoins, the private analog to central bank digital currencies, to a 1-to-1 ratio with "Federal Reserve notes" — would lead to a "financial meltdown" the likes of which would comparable to the "2008 financial crash."

Warren began her floor speech with a lengthy criticism of President Donald Trump, suggesting he stands to benefit financially if the bill passes, before getting to the concern of how it could affect the country.

"A financial meltdown, triggered by crypto instability, is not some alarmist fever dream," Warren said. "In fact, it nearly happened just a few years ago. Crypto markets abruptly lost $2 trillion — that's trillion with a 'T' — after the collapse of several major firms. In 2022, two of the largest stablecoins failed to maintain their pegs."

The senator added that while the tribulations facing crypto went largely unnoticed because "luckily" they were separate from the rest of the financial system, a passing of the GENIUS Act would mean "that ends today."

"The GENIUS Act folds stablecoins directly into the financial system while applying weaker safeguards than banks or investment companies must adhere to. Make no mistake, we are likely to see another financial crisis in the coming years. And we are virtually certain to see another set of wild swings in cryptocurrency values.

"And it will be the American people who will bear the cost of a massive financial crash facilitated by the stablecoin market if Congress passes the GENIUS Act."

Last year, speaking weeks after the assassination attempt in Butler, Pennsylvania, Trump, giving the keynote address to Bitcoin Conference 2024, said effectively that stablecoins would be used to sell U.S. Treasury bills to the world, transforming the dollar into the world's reserve currency along with its debt.

"As part of our effort to provide regulatory clarity, we will create a framework to enable the safe responsible expansion of stablecoins," Trump told the crowd.

"Do you know what a stablecoin is? Does anybody know? Please raise your hand," Trump joked. "Allowing us to extend the dominance of the U.S. dollar to new frontiers all around the world, America will be richer, the world will be better, and there will be billions and billions of people brought into [the] crypto economy and storing their savings in bitcoin. So that's the way it is."

"Those who say that bitcoin is a threat to the dollar have the story exactly backwards, I believe ... bitcoin is not threatening the dollar. The behavior of the current U.S. government is really threatening the dollar."

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