Sen. Warren Urges Treasury to Address Stablecoin Law Risks and Trump Conflict Concerns

Warren calls on the Treasury to tighten enforcement of the GENIUS Act.

The senator warns that gaps in the law could open consumers.

Lawmakers and regulators are pursuing crypto legislation to strengthen consumer protections and oversight.

Sen. Elizabeth Warren is pressing the Treasury Department to strengthen oversight of the enacted Guiding and Establishing Innovation for U.S. Stablecoins Act, known as the GENIUS Act. Being the chief Democratic member of the Senate Banking Committee, she expressed concerns about financial stability and potential conflicts of interest associated with the administration of former President Donald Trump. Warren, in a letter to the Treasury Secretary Scott Bessent, urged rapid modification of regulatory loopholes she believes could put consumers, taxpayers, and the economy at large at risk.

Concerns Over Stablecoin Oversight

This was the first federal framework on the regulation of stablecoins, and it was signed into law as the GENIUS Act in July. The measure will compel the issuers of the stablecoins to fully support their digital tokens with U.S. dollars or similar liquid assets. It also requires annual audits of companies that have a market capitalization of over 50 billion US dollars and provides requirements for foreign issuance

Although these provisions are made, Warren argues that the law still does not cover important areas such as the possible vulnerabilities that may affect financial stability. In her letter, Warren emphasized that the Treasury has an immediate role in implementing the law responsibly

She said the department must ensure enforcement that prevents risks to consumers and the U.S. financial system. According to her, this includes preventing loopholes that could allow crypto banks to operate with insufficient safeguards. Warren’s position aligns with earlier statements from regulators calling for coordinated oversight between federal and state agencies.

Broader Legislative Efforts Underway

Policymakers are currently turning their attention to the regulation of the entire crypto sector in order to regulate the overall market of digital assets. Senate Democrats and Republicans intend to individually hold meetings with crypto executives to address future bills. According to Warren, this process provides Treasury with a chance to strengthen the aspects not discussed in the GENIUS Act

She said that through bipartisan talks, it would be possible to have consumer protections that are stronger and regulatory responsibilities that are clearer to financial institutions Federal Reserve Governor Michael Barr also showed concerns regarding the GENIUS Act. He claimed that the law has gaps that might necessitate cooperation between the federal banking agencies and states.

The comments by Barr are indicative of an increasing worry among policymakers that, unless further coordination is undertaken, regulatory arbitrage can destroy financial stability. The Treasury Department has yet to respond to the letter of Warren. The most important agencies are still working on regulations to implement the law and define the standards of stablecoin regulation.