During remarks on the Senate floor Wednesday, Sen. Elizabeth Warren (D-MA) spoke about the GENIUS Act.
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00:00Senator from Massachusetts.
00:03Mr. President, are we on a quorum call?
00:05We are not.
00:06I just ask for recognition, then.
00:09Senator is recognized.
00:11Thank you, Mr. President.
00:12I rise today to talk about the Genius Act and the threat it poses to our financial system,
00:17our national security, and our democracy.
00:20Now, at this moment, I expected to be on the floor urging the Senate to adopt a series of amendments
00:27filed by both Democrats and Republicans, amendments that would fix the core problems with this bill.
00:34For weeks, Leader Thune promised that senators would have a chance to vote on amendments on the stablecoin bill.
00:42Today, he broke that promise.
00:44This bill goes forward without a single chance for a single senator to offer a single amendment.
00:53Even changes that have widespread bipartisan support are left aside as Leader Thune decides just to strong-arm the bill on through the Senate.
01:04Now, before I outline the specific dangers posed by this bill, it's worth taking a step back to ask a simple question.
01:13Why is the crypto industry so vigorously lobbying for a bill that proponents claim will bring much-needed regulation to the market?
01:25Simon Johnson, a Nobel Prize-winning economist and Brooksley Bourne, the former chair of the Commodity Futures Trading Commission,
01:34answered this question in a recent op-ed by reminding us we've seen this movie before.
01:41Back in the late 1990s, derivatives were a relatively niche market,
01:47but a new type of product called an over-the-counter derivative had just been developed.
01:53Most investors didn't really understand what they were or what they did,
01:57but the derivatives industry came knocking, begging for so-called regulation.
02:04Congress was ready to oblige.
02:07In 2000, Congress passed the Commodity Futures Modernization Act
02:12and President Bill Clinton signed it into law.
02:16Proponents of the bill claimed that the new law would provide legal clarity,
02:21promote innovation, reduce risks, protect consumers, and advance U.S. competitiveness.
02:29After all, people said, surely some kind of regulatory framework was better than nothing at all.
02:37But the bill established a weak set of rules loaded with loopholes, just as the industry wanted.
02:45Sound familiar?
02:47The result was a disaster.
02:50Derivatives moved from the edge of the financial system to the center of it.
02:55After all, with regulation, these derivatives now seemed to have the implicit blessing of the United States government.
03:02And buying, selling, and designing derivatives became a more mainstream activity on Wall Street.
03:10In less than eight years, the market for over-the-counter derivatives grew sevenfold and embedded itself into the core financial system.
03:22By simultaneously boosting the derivatives industry and lightly regulating it,
03:28the bill Congress had passed helped set the stage for the 2008 financial crash.
03:35After the meltdown, Congress came back and cleaned up the mess in Dodd-Frank.
03:41But that was long after hundreds of billions of dollars in taxpayer bailouts had been handed to Wall Street,
03:50while 10 million families had lost their homes and millions more had lost their jobs.
03:59Mr. Johnson's Nobel Prize is an impressive credential, and his warning should carry great weight.
04:07But we should also pay special attention to the thoughts of his co-author, Brooksley Bourne.
04:14She was one of the few people who saw the 2008 train wreck coming and opposed the derivatives bill at the time.
04:22And now she is ringing the alarm again.
04:26The parallels to the Commodity Futures Modernization Act are striking.
04:31Industry is the driving force behind the Genius Act.
04:36Proponents argue the Genius Act will provide legal clarity, promote innovation, reduce risks, protect consumers,
04:45and advance U.S. competitiveness in a new financial market.
04:49Passage of the Genius Act is expected to significantly grow the market from $200 billion now to an estimated $2 trillion in a short time.
05:03And the Genius Act is riddled with loopholes and contains weak safeguards for consumers, national security, and financial stability.
05:14Yeah, it all sounds very similar.
05:17But there is one big difference between the Genius Act and the CFMA.
05:23President Clinton did not own a derivatives company.
05:27President Trump does own a stable coin company.
05:32Through his crypto business, President Trump has created an efficient means to trade presidential favors like tariff exemptions, pardons, and government appointments for hundreds of millions, perhaps billions of dollars from foreign governments, from billionaires, and from large corporations.
05:55This is the single greatest corruption scandal in American history.
06:00And by passing the Genius Act, the Senate is about to not only bless this corruption, but to actively facilitate its expansion.
06:12The New York Times ran a front-page essay this week by Ben Rhodes, President Obama's former Deputy National Security Advisor, on Trump's corruption.
06:23Rhodes interviewed Sander Lederer, who heads a Hungarian anti-corruption organization, and has witnessed the disintegration of Hungary's democracy under Viktor Orban.
06:36Lederer warned, quote,
06:38The pressure corruption puts on a political system is like a river bearing down on a dam.
06:47Once the dam breaks, you're washed down river by currents you can't control.
06:52If you try to rebuild the dam, it's too late.
06:56Instead of fortifying the dam, the Senate is now hacking away at it.
07:02In April, President Trump's crypto company, World Liberty Financial, launched its own stablecoin called USD1.
07:11That stablecoin is already the fifth largest stablecoin in the world, and foreign investors have already begun to exploit this avenue for corruption.
07:22A UAE state-backed investment firm used Trump's USD1 to finance a $2 billion investment in a crypto exchange whose owner is reportedly lobbying President Trump for a pardon,
07:42essentially giving Trump a cut of this $2 billion deal.
07:47This is the model.
07:49Deposit your money in the bank of Trump and use his stablecoin to make payments.
07:56He earns money by investing those deposits in other assets, like a bank, and also earns money on every transaction that occurs,
08:05whenever the stablecoin is used as a means of payment.
08:09Even more publicized than his stablecoin, Trump launched a meme coin, another type of crypto asset.
08:20The coin was issued shortly before Trump's inauguration, and it initially soared in value.
08:27When people lost interest and the value of the coin began to sag, Trump launched a new scheme to make money.
08:36A few weeks ago, he hosted a dinner for the top holders of his meme coin, which again, juiced the price and increased trading volume.
08:48The meme coin has netted more than $320 million in transactions fees alone, and has inflated Trump's net worth on paper by billions of dollars.
09:03And the favors for people who bought millions of dollars of Trump's coins have just begun.
09:10For example, one of those top holders at the dinner was crypto executive Justin Sun, who recently had his SEC lawsuit quietly dropped.
09:22Another was an investor with close ties to the Chinese Communist Party.
09:28There is nothing in the Genius Act to stop this corruption.
09:33In fact, the Senate bill would accelerate the corruption.
09:38The bill would expand the reach of USD 1 and grow its size.
09:43It would make Trump the regulator of his own financial company and, importantly, the regulator of his competitors.
09:52Senator Merkley is leading an amendment to fix this, an amendment that Leader Thune has blocked.
09:59There are other serious problems with the Genius Act, problems that Democrats and Republicans have amendments to fix.
10:07The bill permits big tech companies and other conglomerates to issue their own private currencies and take control over the money supply.
10:17It includes a special carve-out that makes it even easier for private companies like X to issue a stablecoin.
10:26Musk has made it clear that in a few years he wants his new X money payment platform to be, quote,
10:35half of the global financial system.
10:38Senator Hawley and Senator Blumenthal have an amendment to fix that.
10:43Leader Thune has blocked that amendment.
10:47Community banks have warned us that by creating a parallel, lightly regulated banking system,
10:54the stablecoin market will drain deposits from our local communities.
10:59There will be less funding available for small businesses and households all across our country.
11:04Senator Hickenlooper has an amendment to fix that.
11:08Leader Thune has blocked that amendment.
11:12The bill would also mean easier access to money for terrorists and cartels.
11:18Even today, the crypto industry's own analysts are calling stablecoins, quote,
11:25the new kingpin of illicit crypto activity.
11:30According to Chainalysis, a blockchain analytics firm,
11:34stablecoins account for more than 60% of all illicit crypto transactions.
11:42Unfortunately, the Genius Act massively expands the marketplace for stablecoins while failing to address the basic national security risks posed by them.
11:54It also includes glaring loopholes that would allow Tether, a notorious foreign stablecoin issuer now based in El Salvador,
12:04would allow Tether access to U.S. markets.
12:08Just this week, just this week, prosecutors charged a Russian national in New York for using Tether to help Russians evade U.S. sanctions.
12:19Senators Schumer, Reed, Shaheen and Blunt Rochester have amendments to fix those problems.
12:26Leader Thune has blocked those amendments.
12:29The bill also increases the likelihood that consumers will get ripped off and scammed in financial transactions involving stablecoins.
12:39It jeopardizes the CFPB oversight and the suite of consumer protections that people enjoy when they're using their Venmo app or an ordinary bank account.
12:52If you get cheated using a stablecoin, you may just be out of luck.
12:57The vast majority of stablecoin issuers won't even be required to undergo financial audits to make sure that they aren't committing fraud.
13:06Senators Durbin and Warnock have an amendment to fix this.
13:11Senator Thune has blocked that amendment.
13:14And finally, the Genius Act lacks the basic safeguards necessary to ensure that stablecoins don't blow up our entire financial system.
13:24The bill permits stablecoin issuers to invest in risky assets and allows them to engage in risky non-stablecoin activities like private credit or derivatives trading.
13:39At the same time, the bill constrains regulators' ability to apply capital and liquidity safeguards to limit the chances of stablecoin failures.
13:50Again, we have amendments to fix this.
13:54And again, Leader Thune has blocked those amendments.
13:59Over the past few months, Democrats seem to have forgotten that we actually have some power.
14:05This is an opportunity to use that power.
14:09Democrats can withhold their approval of this bill today and say that the bill will not go forward unless we have the opportunity to vote on it.
14:19to vote on some amendments, precisely as Leader Thune promised we could do.
14:26Democrats should show a little spine and insist on amendments as the price for helping advance this bill.
14:35We don't have to speculate on what can go wrong if this bill advances without changes.
14:42We have already seen it.
14:45The next time Trump is cut into a corrupt deal by a foreign government using his stablecoin.
14:52Or the next time North Korea uses stablecoins to add to its nuclear arsenal.
14:59Or the next time a person falls victim to a stablecoin scam.
15:05Or the next time the financial system is stressed by a stablecoin run.
15:11It is likely that the resulting harm will be traced right back to the inadequacies of the Genius Act.
15:20I urge my colleagues to vote no on this bill.
15:25Of course, I will list all of you.
15:27Let me give you a moment to vote on that bill and say that.
15:31We will not be occupied by ahali.
15:33I wish you candidates for this bill to vote on the board.
15:35We do not want to vote on the board.
15:37We do not want to vote on the board or vote on the board.
15:39We do not want to vote on the board.
15:41We want to vote on the board by a national security system.
15:43The second time if we will vote on the board?