Crypto critic Sen. Elizabeth Warren lambasted a stablecoin bill signed into law a few months ago and is urging the Treasury Department to fill in gaps to address President Donald Trump-linked conflicts of interest and protect consumers.

Warren, who is the top Democrat of the Senate Banking Committee, called the Guiding and Establishing Innovation for U.S. Stablecoins Act, or GENIUS, as it's aptly called, a "light-touch regulatory framework for crypto banks," in a letter sent to Treasury Secretary Scott Bessent. Punchbowl News first reported on the letter.

"It is critical that Treasury take steps to implement and enforce the law in a manner that attempts to limit severe risks to U.S. financial stability, consumers, taxpayers, and national security," Warren said in the letter.

GENIUS was signed into law by Trump in July after passing out of the House and Senate. The act requires stablecoins to be fully backed by U.S. dollars or similarly liquid assets, mandates annual audits for issuers with a market capitalization of more than $50 billion, and establishes guidelines for foreign issuance. Key agencies are now working on implementing the law.

Now, lawmakers have turned to drafting and passing bills to regulate the crypto industry at large, which Warren says can be used to address weaknesses in the GENIUS Act. This comes as Senate Democrats and Republicans are expected to hold two separate meetings with crypto executives to discuss the larger bill. The Democrat meeting is slated for 11:30 a.m. ET and the Republican meeting for 2 p.m. ET on Wednesday, a person familiar said.

"Treasury has an opportunity to address some of these risks in bipartisan negotiations over legislation being considered in Congress to set the rules for the overall market structure of the crypto industry," Warren said in the letter.

Warren is not alone in raising concerns about weaknesses in the GENIUS Act. Last week, Federal Reserve Governor Michael Barr said the law leaves several regulatory gaps and called on federal banking agencies and states to work together on rules to close them and safeguard the financial system.

Specific concerns

A major concern for Democrats has been President Trump's involvement in the crypto industry. Particularly for stablecoins, some Democrats voiced concerns about Trump family-run World Liberty Financial USD, which is now one of the largest stablecoins in the world, according to Bankrate.

"Given the importance of addressing this glaring problem, I expect that Treasury will propose specific steps for addressing corruption it implements in the GENIUS Act, explain how it has insulated its proposed rules from conflicts of interest, and advocate for a meaningful legislative solution as Congress considers setting the rules for the broader structure of the crypto market," Warren said in the letter.

Treasury also needs to propose strong plans for addressing illicit finance and how it plans to mitigate risks that consumers will get ripped off in transactions involving stablecoins, Warren said. As for financial stability, Warren said GENIUS does not have the necessary safeguards to "ensure that stablecoins don’t blow up our entire financial system."

The Massachusetts Senator cited Paxos' recent accident minting $3 trillion PYUSD stablecoin tokens, which the company attributed to a technical issue.

"This incident demonstrates the serious risks that operational failures can pose to an issuer, market integrity, and potentially financial stability," Warren said. "Treasury owes the public an explanation for how it intends to address those risks and, if it cannot, the authority it needs from Congress to do so."

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