During remarks on the Senate floor Monday, Sen. Elizabeth Warren (D-MA) spoke in opposition to the GENIUS Act.
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00:00Senator from Massachusetts.
00:01Mr. President, I rise today to talk about the Genius Act.
00:06Analysts expect that passing the Genius Act could grow the stable coin market tenfold
00:12over just the next three years.
00:14That would take a $200 billion market to a $2 trillion market,
00:21making it just a little bit smaller than the entire GDP of Canada.
00:26Two weeks ago, Democrats refused to vote for the bill because it had inadequate safeguards for consumers
00:33and it posed too much risk, both for our financial stability and our national security.
00:40Democrats also voted no because the bill failed to address President Trump's blatant crypto corruption.
00:49So, here we are again.
00:51What has changed in the bill since the last vote?
00:54The answer? Not much.
00:57Its basic flaws remain unaddressed.
01:01While a strong, stable coin bill is the best possible outcome,
01:06this weak bill is worse than no bill at all.
01:11First, corruption.
01:13It is fitting that we are voting on the Genius Act just a few days
01:17before President Trump hosts a, quote,
01:21private intimate dinner and a VIP White House tour for the top investors in his meme coin,
01:30many of whom remain anonymous.
01:33Buyers, including some apparently foreign investors,
01:38reportedly spent an estimated $148 million in the contest,
01:44enriching Donald Trump and his family.
01:47And yet, this pay-to-play scheme is only the tip of the iceberg of the president's crypto corruption.
01:57Trump and his family have already pocketed hundreds of millions of dollars from his crypto ventures,
02:03and they stand to make hundreds of millions more from his stable coin, USD1, if this bill passes.
02:12It launched only weeks ago, but USD1 is already the fifth largest stable coin in the entire world.
02:21Passing this bill means that we can expect more anonymous buyers,
02:26big companies, and foreign governments to use the president's stable coin
02:32as both a shadowy bank account shielded from government oversight
02:37and as a way to pay off the president personally.
02:42For crooks, it is a two-for-one.
02:45This is not a hypothetical problem.
02:48Already, an Abu Dhabi investment firm called MGX
02:53is using Trump's stable coin to finance a $2 billion investment
02:59in the Binance cryptocurrency exchange,
03:03essentially just cutting Trump in on the deal of this enormous financial transaction.
03:11MGH is chaired by the intelligence chief of the United Arab Emirates
03:16and co-owned by a firm with extensive ties to the Chinese government.
03:23If Congress passes this bill, USD won't just be a coercive tool
03:29to pay off a corrupt president.
03:31It will be a financial instrument blessed by the United States government.
03:37And this bill provides even more opportunities
03:40to reward buyers of Trump's coins
03:43with favors like tariff exemptions, pardons, and government appointments.
03:50For months, many Democrats have pushed for common-sense ethics provisions in this bill.
03:57Unfortunately, the final bill does nothing, nothing,
04:02to rein in the president's crypto corruption.
04:05But some supporters say,
04:07well, that's because the corruption's already happening,
04:09and at least this bill won't make it any worse.
04:12That is wrong.
04:13The Genius Act will accelerate Trump's corruption
04:17by supercharging the size of the stablecoin market
04:21and the reach and profitability of Trump's USD-1.
04:27And for the first time in American history,
04:32this bill will make our president, Donald Trump,
04:35the regulator of his own financial product.
04:39This Congress should be a check on the president.
04:44Congress should not be making it even easier
04:46for him to line his pockets with even more shady crypto cash.
04:51If Congress does not fix this issue here today,
04:57then it will be aiding and abetting his corruption
05:00every time President Trump's stablecoin
05:04is used to finance a corrupt deal.
05:07Second problem, financial stability.
05:12I am deeply concerned that this bill
05:15will directly lead to the next financial meltdown.
05:18This is not the first time
05:19that Congress has listened to the financial industry
05:22and created a weak regulatory regime
05:26for a new innovative financial product.
05:29We have seen this story before,
05:31and we know how it ends.
05:3325 years ago,
05:35Congress passed the Commodity Futures Modernization Act
05:38to support the obscure financial derivatives market.
05:43And almost nobody noticed.
05:44At the time,
05:46derivatives were a relatively niche financial product.
05:49Most people really didn't understand
05:51what they were or what they did.
05:54But when the derivatives industry came knocking,
05:58begging for so-called regulation,
06:01Congress was willing to oblige.
06:03After all,
06:05people said,
06:06surely some kind of regulatory framework
06:09was better than nothing.
06:11So, Congress created a weak set of rules
06:13that was loaded with loopholes,
06:15just like the industry wanted.
06:18The result was a total disaster.
06:22Derivatives moved from the edge of the financial system
06:25to the center of it.
06:26The result was that a law so massively expanded
06:33the reach of the derivatives market
06:35and further integrated it into the core financial system.
06:40That bill helped set the stage for the 2008 financial crash.
06:47Congress came back after the meltdown
06:49and cleaned up the mess in Dodd-Frank.
06:51But that was long after 10 million people lost their homes
06:56and millions more people lost their jobs and their savings.
07:02In the last decade,
07:03we saw this story in another version
07:07and just barely avoided another disaster because of it.
07:12In 2018, Congress debated and enacted S-2155,
07:19the Bipartisan Economic Growth, Regulatory Relief,
07:23and Consumer Protection Act
07:24right here on the floor of the Senate.
07:27Republicans in the banking industry pushed that bill
07:30and a number of Democrats joined them as well.
07:34They voted to roll back critical post-2008 crisis reforms
07:39for some of the largest banks in the country.
07:43Five years later, just five years later,
07:46three of those newly deregulated banks failed.
07:51Those three failures were the second, third,
07:54and fourth largest failures among banks in American history.
08:00For a while, it looked like we might face a run
08:03on the whole banking system.
08:05Swift action by regulators to bail out uninsured depositors
08:10and a whole lot of luck
08:11are the only reasons we didn't face
08:14yet another financial meltdown just two years ago.
08:19And now, here we are back to do the same thing again.
08:24A financial meltdown triggered by crypto instability
08:27is not some alarmist fever dream.
08:31In fact, it nearly happened just a few years ago.
08:35Crypto markets abruptly lost $2 trillion,
08:39that's trillion with a T,
08:42after the collapse of several major crypto firms.
08:45In 2022, two of the largest stable coins
08:50failed to maintain their pegs.
08:53Now, luckily, these cryptocurrency markets
08:56were mostly separate from the rest of the financial system.
09:00So we avoided the mass economic destruction.
09:04That ends today if we enact this bill.
09:08The Genius Act folds stable coins
09:11directly into the traditional financial system
09:14while applying weaker safeguards
09:17than banks or investment companies must adhere to.
09:21Make no mistake,
09:23we are likely to see another financial crisis
09:26in the coming years,
09:27and we are virtually certain
09:29to see another set of wild swings
09:32in cryptocurrency values.
09:34And it will be the American people
09:37who will bear the costs
09:39of a massive financial crash
09:41facilitated by the stable coin market
09:44if Congress passes the Genius Act.
09:47Third problem,
09:50if this bill passes,
09:51it will mean easier access to money
09:55for terrorists and drug cartels.
09:58Even today,
09:59the crypto industry's own analysts
10:02are calling stable coins,
10:04quote,
10:05the new kingpin of illicit crypto activity.
10:10According to Chainalysis,
10:12a blockchain analytics firm,
10:13stable coins account for more than 60%
10:17of all illicit crypto transactions.
10:22There's a reason for this.
10:24These stable coins are an ideal payment system
10:27that works for cartels, terrorists,
10:31sanctions evaders,
10:32and human traffickers
10:33to finance crime.
10:36Unfortunately,
10:37the Genius Act
10:38massively expands the marketplace
10:41for stable coins
10:43while failing to address
10:45the basic national security risks
10:47posed by them.
10:49The bill fails to apply
10:51any money laundering safeguards
10:53to exchanges and intermediaries
10:56that facilitate the movement,
10:59obfuscation,
11:00and custody of stable coins.
11:03The bill includes glaring loopholes
11:06that would allow Tether,
11:08which has reportedly become
11:10the cryptocurrency of choice
11:12for illicit actors
11:14because of its alleged willingness
11:16to turn a blind eye
11:18to money laundering
11:20to now get access to U.S. markets.
11:23In fact,
11:24the bill text
11:25now contains
11:26a so-called
11:27decentralized finance loophole
11:30that allows Tether
11:32and other non-compliant stable coins
11:35to access U.S. markets
11:37without any constraints,
11:39a loophole
11:40that does not exist today
11:43and that didn't even exist
11:45in the bill
11:46until this past weekend.
11:49I don't want to see
11:50fentanyl traffickers
11:52or child pornographers
11:54or terrorists
11:55or countries
11:57that are trying to avoid sanctions
11:59all finance their operations
12:02with U.S.-backed stable coins.
12:04And I certainly
12:06don't want to see
12:07a major expansion
12:08of access to money
12:10by America's adversaries.
12:13But if we pass this bill
12:14in its current form,
12:16that is exactly
12:17where we are headed.
12:20Fourth problem.
12:22If this bill passes,
12:23it will allow
12:24Elon Musk
12:25and Mark Zuckerberg
12:27to issue their own money.
12:29The bill still permits
12:30big tech companies
12:32and other conglomerates
12:33to issue
12:34their own private currencies.
12:37Community banks
12:38have warned us
12:39that by creating
12:40a parallel,
12:43lightly regulated
12:44banking system,
12:45the stable coin market
12:47will drain deposits
12:48from our local
12:49community banks
12:51and from the communities
12:52they serve.
12:54There will be
12:54less funding available
12:56for small businesses
12:57and households
12:58all across the country.
12:59So, if this bill
13:01becomes law,
13:03Congress will be responsible
13:05if a handful of giants
13:07take control
13:08of our money
13:08and then access
13:10and abuse
13:11troves of valuable
13:13consumer spending data.
13:16We will be responsible
13:17if small businesses
13:19struggle to access credit
13:21and if more community banks
13:23disappear.
13:26Finally,
13:27if this bill passes,
13:29main street investors
13:30will be at greater risk
13:32of getting robbed
13:33and scammed.
13:35The bill jeopardizes
13:36the CFPB oversight
13:38and the suite
13:39of consumer protections
13:41that people enjoy
13:42when using their Venmo app
13:44or their bank account.
13:46If you get cheated
13:47using a stable coin,
13:49you may just be out of luck.
13:52Our constituents
13:53will be reaching out
13:54to our offices
13:55because they have
13:57fallen victim
13:58to a stable coin scam
13:59or have been saddled
14:01with junk fees
14:02when they redeem
14:02their stable coin
14:03only to discover
14:05that in many cases
14:06there will be no recourse.
14:10Congress should not choose
14:12to enable
14:13President Trump's
14:15egregious corruption.
14:17Congress should not fuel
14:19the next financial crash.
14:21Congress should not put
14:24consumers at risk
14:25for fraud
14:26or make it easier
14:28to engage
14:29in terrorist activities.
14:31It doesn't have
14:33to be this way.
14:34A bill
14:35that meaningfully
14:36strengthens
14:37oversight of the
14:38stable coin market
14:39is worth enacting.
14:41A bill
14:42that turbocharges
14:44the stable coin market
14:45while facilitating
14:47the President's
14:48corruption
14:49and undermining
14:51national security,
14:52financial stability,
14:53and consumer protection
14:55is worse
14:56than no bill
14:58at all.
15:00For these reasons,
15:01I urge my colleagues
15:03to vote no
15:04on the Genius Act.
15:07Madam President,
15:08I yield the floor.