- Senator Gillibrand reports progress and increasing Democratic support for the legislation.
- Senator Warren raises concerns about lawmakers’ families, BigTech, and financial crime loopholes in the bill.
- The legislation would allow family members of officials and some large tech firms to issue stablecoins under certain conditions.
- Remaining disagreements include financial stability risks, reserves management, and possible offshoring of stablecoin issuance.
Senate leader John Thune has initiated a new procedural vote on the Genius Act, a law intended to set out rules for stablecoins in the United States. Last week, the same measure failed in the Senate, but lawmakers may hold another vote as early as next week. The push aims to clarify who can issue stablecoins and establish new safeguards for their use.
Senator Gillibrand stated that key changes have brought more Democrats on board to support the bill. Despite this, Senator Warren released a memo highlighting several problem areas that remain unresolved. The law attempts to bar sitting officials from launching stablecoins but does not prevent their family members from doing so.
In her memo, Senator Warren said, “there’s nothing in the Bill stopping elected officials and their families from issuing stablecoins.” This follows media reports about the Trump family’s ties to World Liberty Financial and a $2 billion transaction using the stablecoin USD1 by a company run by a UAE official. Senator Gillibrand clarified that the bill prohibits elected members and top government officials from issuing payment stablecoins while in office, but family members remain unaddressed.
Senator Warren also raised concerns that large technology companies could still issue stablecoins. The latest draft requires public non-financial companies – such as Meta – to receive approval from a new Stablecoin Certification Review Committee, which considers financial stability, consumer data protection, and business ties. This rule, however, does not cover private companies like X (formerly Twitter) or Stripe.
Another worry from Senator Warren is the risk of stablecoins being used in terrorism or criminal activities. She argues that restrictions on foreign stablecoin issuers in the U.S. are ineffective since coins can still enter through offshore platforms and decentralized exchanges. The latest draft changes the term “any person” to “digital asset service provider,” a shift that may make it harder to regulate individuals operating on these exchanges.
The memo further points out that the bill would allow stablecoin issuers to hold reserves in riskier assets and in foreign accounts, which, according to Senator Warren, exposes the system to instability. She also notes that new rules might let investment firms lend out underlying assets in tokenized money market funds—potentially sidestepping the bill’s protections.
Many other countries require stablecoin reserves to be held locally and restrict investments to government securities to limit risks. The Genius Act differs by offering more flexibility, aiming to encourage the tokenization of assets, though some argue that clearer standards are needed for custody and audits.
Senator Warren has consistently opposed cryptocurrencies and stablecoins, making her support for the Genius Act unlikely. Some lawmakers, however, believe that new regulations are necessary given the growing presence of stablecoins and the current lack of federal oversight.
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