The GENIUS Act, a new regulatory project aimed at strengthening stablecoins, has become the subject of fierce debate. Elizabeth Warren raises important questions about the safety and legitimacy of this law.
Elizabeth Warren's Critique
Elizabeth Warren expresses serious concerns regarding the GENIUS Act, comparing it to a subpar law preceding the 2008 financial crisis. She argues that this law follows a similar path by using weak regulatory measures, which could lead to situations akin to those seen with financial derivatives in 2000.
> "We have already seen this movie when the industry writes its own laws." CITE_NA
In Warren's view, the promised stability could mask dangerous permissiveness, with private stablecoins backed by the dollar potentially becoming the new subprimes.
Trump's Personal Interests
Warren criticizes Donald Trump, suggesting that he is using his presidency to enrich himself through favorable crypto regulation. "Trump uses the presidency to enrich himself through cryptos, and he does so in full view of everyone." CITE_W_A
She contends that personal interests are taking precedence over the common good, leading to a conflict of interest in the regulatory landscape.
Potential Risks of New Regulatory Approach
The GENIUS Act opens the doors to a new form of finance, where stablecoins may become quasi-banks, warns economist Sergi Basco. He highlights that insufficient oversight of stablecoin issuers could lead to potential banking panics. Warren further adds that the public could mistakenly believe that the government backs these currencies.
> "The public could mistakenly believe the government backs these currencies." CITE_NA
Concerns exist that the illusion of security could trigger a crisis if trust in these systems collapses.
The GENIUS Act represents an ambitious step toward reviving the digital dollar, but hidden behind this goal are significant risks capable of undermining financial stability. Elizabeth Warren emphasizes the need for vigilance regarding changes that could profoundly impact the economic system.
