Senator Elizabeth Warren is sounding the alarm about a new bipartisan bill aiming to regulate stablecoins. She argues the bill doesn’t go far enough to protect the financial system from potential collapse.
A Risky Bet?
The “GENIUS Act,” already passed by the Senate Banking Committee, seeks to clarify stablecoin regulations. However, Senator Warren disagrees, stating the bill allows for risky investments and leaves taxpayers vulnerable to future bailouts. She points out that the bill would let stablecoin companies invest in the same types of risky assets that required government bailouts in 2008 and 2020.
The Bailout Threat
Warren specifically highlighted Circle, a major stablecoin company, which would have likely failed earlier this year without a government bailout of its Silicon Valley Bank deposits. She believes this bill practically guarantees more taxpayer-funded bailouts down the line.
What’s in the Bill?
The proposed legislation mandates a 1:1 backing of stablecoins. This backing can include US currency, deposits at insured banks, and US Treasury securities. However, Warren argues that these measures are insufficient to prevent a systemic crisis.
Warren’s Concerns
In short, Senator Warren believes the bill is dangerously lax, potentially jeopardizing financial stability and leaving taxpayers on the hook for future bailouts. She’s urging for stronger safeguards to be included before the bill becomes law.
