Key Takeaways:
Senator Warren is challenging a provision in the GENIUS Act that exempts certain crypto wallet providers from oversight.
Warren has introduced an amendment that would ban sitting presidents and their families from profiting off stablecoins or wallet infrastructure.
Fellow Democrats, including Senator Jeff Merkley, have echoed concerns that the bill could legitimize influence peddling in crypto under the guise of innovation.
Senator Elizabeth Warren is moving to tighten a provision in the bipartisan GENIUS Act that she says creates a loophole for cryptocurrency wallets, one she warns could directly benefit President Donald Trump and his family.
Warren alleges that Republicans quietly added a last-minute exemption for crypto wallet providers in the GENIUS Act, a move she claims was designed to benefit Trump’s growing involvement in the industry.
According to Warren, this loophole could allow the Trump family to bypass essential regulatory scrutiny while launching products like their planned crypto wallet tied to the USD1 stablecoin.
“The American people deserve transparency and integrity, not backroom deals to enrich former presidents,” Warren said in a social media post announcing her amendment.
She warned that she won’t support the bill unless the wallet exemption is removed and strict anti-corruption measures are added.
The GOP slipped a last-minute carveout for crypto wallets into the GENIUS Act—and now the Trump family is planning to launch one.
I’ll introduce an amendment to close this loophole, but this bill shouldn’t pass without serious anti-corruption fixes. pic.twitter.com/PSbskZFvv5
— Elizabeth Warren (@SenWarren) June 4, 2025
Trump’s Crypto Moves Spark Ethics Alarm
At the center of this political storm is World Liberty Financial (WLFI), a firm reportedly backed by the Trump family. WLFI launched the USD1 stablecoin in March and is now believed to be developing an integrated crypto wallet platform.
These developments have intensified scrutiny from Democratic lawmakers, who argue that the GENIUS Act, if passed without proper safeguards, would effectively grant a green light to Trump’s crypto ambitions.
Senator Jeff Merkley (D-Ore.), a longtime ally of Warren on financial oversight issues, has also raised concerns.
“We cannot allow legislation to open doors for influence peddling or profit schemes tied to former presidents,” Merkley said during a Senate briefing.
The controversy stems from a provision in the GENIUS Act that allegedly exempts certain crypto wallet services from oversight if they operate outside direct custody models.
Critics say this clause could shield entities like WLFI from accountability, despite managing wallets linked to high-volume stablecoin transactions.
This comes on the heels of a $2 billion stablecoin investment deal between WLFI and a sovereign wealth fund in the United Arab Emirates, further fueling accusations of international influence and profit-making tied to Trump’s political brand.
A state-backed investment firm in Abu Dhabi is set to make a $2 billion investment into crypto exchange @Binance using USD1.#Trump #Binancehttps://t.co/2s6LBsx0SL
— Cryptonews.com (@cryptonews) May 3, 2025
Warren’s amendment reportedly includes a prohibition on any sitting or former president and their immediate family from profiting off stablecoins, wallet infrastructure, or related services.
It would also mandate full disclosure of any financial interests in digital asset ventures by political officeholders and candidates.
Will Congress Close the Door on Political Crypto Profit?
The GENIUS Act is considered a landmark attempt at establishing comprehensive federal regulation for stablecoins.
It includes mandates for 1:1 reserves, defines payment stablecoins, and assigns oversight responsibilities; provisions welcomed by many in the crypto industry seeking regulatory clarity.
Warren and her allies argue that the bill doesn’t go far enough to prevent corruption. Without tighter restrictions, they say, it creates an opening for political elites to leverage insider access and shape crypto rules for personal gain.
“We’re not just regulating finance—we’re protecting democracy from being sold to the highest bidder,” Warren told reporters.
On May 19, the U.S. Senate took a key step toward regulating stablecoins by advancing the GENIUS Act with a bipartisan vote of 66-32. The vote followed a week of intense negotiations, with 16 Senate Democrats joining Republicans to overcome a previous deadlock.
The Senate advanced the GENIUS Act with a 66-32 bipartisan vote on Monday, marking a big step toward establishing federal regulation for stablecoins and digital currency oversight.#GENIUSAct #Stablecoinshttps://t.co/JmoPuWjKdf
— Cryptonews.com (@cryptonews) May 20, 2025
The bill, co-sponsored by Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.), would establish clear rules for stablecoin issuance and federal oversight.
It now heads to the Senate floor for debate and is expected to have enough support to proceed to the House.
However, concerns are growing over a proposed amendment from Warren, which some in the crypto industry say could jeopardize the bill’s progress.
Critics argue the amendment may discourage future public-private partnerships, while supporters insist ethical safeguards are necessary to prevent political favoritism in the growing digital finance sector.
Meanwhile, in a joint statement on June 2, four leading industry groups—the Blockchain Association, Crypto Council for Innovation, Chamber of Digital Commerce, and DeFi Education Fund—urged lawmakers to keep the bill focused, warning that unrelated amendments could derail long-overdue regulatory clarity.
The post Warren Targets GOP’s Crypto Wallet Loophole in GENIUS Act – Will Her Amendment Block Trump’s Wallet Ambitions? appeared first on Cryptonews.
