WASHINGTON, DC -- Citing a lack of consumer and taxpayer protections and serious crypto corruption and national security concerns, U.S. Senator Jack Reed (D-RI) voted against the so-called GENIUS Act (S.1582), which passed the U.S. Senate on a vote of 68-30.

The controversial bill places a government stamp of approval on “stablecoins,” which are crypto dollars that could be minted by big retailers, big tech companies, foreign companies, and even President Trump’s family. In a similar way that banks allow customers to send and receive money, stablecoins claim to do the same in a faster and cheaper way.

Exposing taxpayers, consumers, and the financial system to high levels of risk, the GENIUS Act says that stablecoin companies would not need to comply with dozens of the same consumer protection laws that apply to similar firms and that help prevent scams and fraud.

This legislation repeats some of the same mistakes that led to the 2008 financial crisis, fostered by the mistaken belief that stablecoin issuers are simple and safe companies that are unlikely to get into trouble and do not need significant regulation to protect customer funds.

Rather than provide meaningful protections for consumers, the legislation weakens existing state laws on cryptocurrency to make it possible for stablecoin companies to operate with near-zero capital, meaning that companies could be unable to weather a financial crisis.  This leaves U.S. taxpayers exposed to bailouts if crypto markets crash.

Furthermore, the bill makes it possible for stablecoin companies to avoid getting an independent audit and makes it virtually impossible for the government to revoke a stablecoin company’s charter, even if the company engages in fraudulent activity. And if a stablecoin company goes bankrupt, consumers must get in line to get their money back and hope that they will make a full recovery.

The bill coincides with the launch of the Trump family’s own stablecoin venture called “USD1,” which has already been used by a foreign government to funnel at least $2 billion to the President.  The bill actually includes an express provision greenlighting the ability to name a stablecoin “USD,” as President Trump has done.

Another beneficiary of this bill is Tether, the world’s largest stablecoin that is based in El Salvador and is used by North Korea, Russian arms dealers, ransomware attackers, the Iranian military, drug cartels, and many other criminal organizations.  Russia, Iran, and North Korea will continue to have venues to use dollar alternatives to bypass U.S. sanctions.

The GENIUS Act allows Tether to operate freely in the United States with minimal oversight and without providing sufficient tools for the government to stop its abuse for weapons proliferation, war, human trafficking, scams, and other illegal activity.

Senator Reed says that Congress should be fostering innovation while protecting consumers and national security, however unless these issues are fixed, the GENIUS Act would not balance these two important goals.

“The so-called GENIUS Act is deeply flawed and doesn’t do enough to protect consumers, national security, and U.S. taxpayers.  Instead of strengthening consumer protections and building clear guardrails that prevent America’s adversaries from using stablecoins to their advantage, this bill greenlights President Trump using his office to line his own pockets while looking the other way at North Korea’s crypto abuses,” said Senator Reed.  “As the popularity of stablecoins continues to grow, we need to provide real guardrails and authorities for regulators.  Nevertheless, Senate Republicans have prioritized the wants of President Trump over the needs of American consumers.”

Senator Reed has taken to the Senate floor twice recently to outline his concerns with the GENIUS Act, including in a speech Monday night. In remarks on the Senate floor last Thursday, Senator Reed called on Republicans to work across the aisle to better serve American consumers and strengthen crypto guardrails.

The full transcript of those remarks follows:

Mr. President, I rise today to discuss S. 1582, the so-called GENIUS Act.

Several weeks ago, when the Majority Leader said we would have votes on amendments, I took him seriously and was one of the first to file. 

We could have been voting on my amendments and those of my colleagues at any time in the last few weeks, but that hasn’t happened.  That is regrettable, because the GENIUS Act, as it is currently drafted, is fundamentally flawed. 

The GENIUS Act exposes taxpayers, consumers, and the financial system to unacceptable risk.  And it creates venues for criminals, terrorists, and rogue governments to finance their illicit activities.  

Among other things, this bill places the U.S. government’s stamp of approval on Tether—the world’s largest stablecoin, which is based in El Salvador and favored by North Korea, Russian arms dealers, ransomware attackers, the Iranian military, the drug cartels, and so many other criminal organizations. 

It takes already weak state laws, makes them weaker, and applies them nationwide…making it possible for stablecoin companies to operate with near-zero capital and unable to weather a financial crisis.  It’s possible for stablecoin companies to avoid getting an audit.  It’s impossible for the government to revoke a stablecoin company’s charter—even if it turns out to be a Ponzi scheme or if an executive dips into customer funds.

The GENIUS Act buys into the belief that the billionaires running the industry know what they’re doing and that the marriage of complex financial products and complex technology simply can’t fail.  The one thing the billionaires know how to do is protect their interests. 

Not surprisingly this bill leaves open the door to bailouts, which we have seen time and time again for other lightly regulated nonbanks that got into trouble, like Fannie Mae and Freddie Mac, AIG, and Bear Stearns. 

When there is a run on a stablecoin…and there will be a run one day…the industry will run to the American taxpayer for a bailout, and the GENIUS Act paves the way for that to happen with no limits on the Federal Reserve’s authority to prop up the industry.

Finally, this bill perpetuates Donald Trump’s naked corruption.  It actually greenlights the name of Trump’s stablecoin—USD1—and allows Trump’s hand-picked regulators to write the rules of the road governing his most recent business venture. 

Mr. President, we need to provide real guardrails for financial regulators to protect consumers, real tools for national security agencies to address this new technology, and real authority for the government to intervene before a crisis gets out of hand. 

Real guardrails and real tools . . .  not words on a page that give only the “aura” of regulation and protection with no teeth. 

My amendments and those offered by colleagues on the both sides of the aisle would help provide these tools and authorities.  However, it appears that we won’t have the opportunity to consider a single one of them and fix this bill.

I urge my colleagues to oppose this highly flawed bill.