The future of the bipartisan GENIUS Act was thrown into doubt after nine Senate Democrats publicly opposed the bill in its current form just days ahead of its scheduled appearance on the Senate floor.
Warren slams GENIUS Act over Trump-linked USD1 stablecoin deal
Source Cryptopolitan
Senator Elizabeth Warren has criticized the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act due to the corruption claims surrounding Trump’s USD1 stablecoin.
Warren is pleading with the US Senate to reject the bill, which both parties in Congress previously supported.
In a post on X, Warren called out what she described as a “shady crypto deal” between the Trump-affiliated firm and the United Arab Emirates, a foreign government that, she claims, is set to funnel significant funds to the Trump family. According to Warren, the controversial arrangement helped catapult USD1 to become the seventh-largest stablecoin in the world.
The GENIUS Act, a bipartisan effort aimed at establishing a federal regulatory framework for stablecoins, has faced mounting scrutiny following revelations that World Liberty Financial (WLFI), a crypto firm co-founded by Eric Trump and Zachary Witkoff, secured a substantial investment from Abu Dhabi-backed MGX to use USD1 for transactions on Binance, the world’s largest crypto exchange.
Senator Warren has called the GENIUS Act a “grift,” claiming it could allow Trump family members to financially benefit from it and expose Americans to financial risks, consumers to exploitation, and the country to security risks.
She argues the bill, as currently drafted, doesn’t contain enough protections against money laundering and doesn’t guard against potential misuse of stablecoins by foreign rivals.
She stressed that the Senate should not affirm a crypto bill enabling this sort of power abuse this week.
Warren makes an unexpected U-turn on the GENIUS Act before the House floor vote
Several unforeseen issues have arisen due to President Donald Trump’s plan to implement strong stablecoin legislation in the US. A recent example is the refusal of US Senator Elizabeth Warren to endorse the GENIUS Act.
Senator Warren pointed out flaws in the bill because she worried that if it passed, the Trump-backed World Liberty Financial (WLFI) would amass an illegal fortune. The senator based her case on WLFI’s most recent agreement with MGX, a company based in the United Arab Emirates, to rely on the USD1 stablecoin in order to fund its $2 billion Binance investment.
Later, the USD1 stablecoin experienced frenetic daily trading volumes and a rise in its market capitalization due to the MGX arrangement. Due to these allegations, Elizabeth Warren urged the Senate to reject the GENIUS Act on the grounds of unjust enrichment ahead of a full House vote. Warren’s U-turns before a House floor vote on the GENIUS Act have caught the Trump administration off guard.
Additionally, apart from Warren, Ten US senators have withdrawn their support for the GENIUS Act because it lacks anti-money laundering and national security protection rules.
Interestingly, according to the Trump administration’s earlier statements, the GENIUS Act was anticipated to overcome all legislative obstacles. However, David Sacks claimed that although the bill was predicted to receive final assent in May, interest had since declined.
The Trump-backed WLFI will be the most negatively impacted if the bill is not approved. According to reports, the WLFI delayed the centralized exchange listing while the company waited for regulatory clarification.
In addition, the delay could hurt USD1’s chances of beating Tether in their head-to-head competition as it tries to catch up to industry first-movers.
Nine Democrats in the Senate oppose the GENIUS Act
Among them were Ruben Gallego, Andy Kim, Lisa Blunt Rochester, and Mark Warner, who, according to reports, were among the four senators who voted to move the bill forward from the Senate Banking Committee in March. The statement, however, did not bear the signatures of Kirsten Gillibrand and Angela Alsobrooks, the Democratic co-sponsors of the bill.
The group said in a statement that the current version of the bill has “numerous issues” that need to be addressed, including strengthening provisions on national security, foreign issuers, anti-money laundering, maintaining the safety and soundness of their financial system, and holding those who violate the act’s requirements accountable.
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