GENIUS Act Could Spark 2008 Level Chaos, Critics Warn

The GENIUS Act may have been signed into law with promises of crypto clarity and economic innovation, but a growing chorus of critics including Senator Elizabeth Warren are warning that the bill might usher in a crisis on par with the 2008 financial meltdown.

In an interview last week with Vanity Fair, Warren didn’t hold back. She called the law a “power grab” written by and for industry players and potentially just as dangerous as the 2000 Commodity Futures Modernization Act (CFMA), a bill that many economists now blame for lighting the fuse that led to the Great Recession.

“We’ve seen this before,” Warren said.

“When Washington lets powerful industries write their own rules, it’s the rest of us who pay the price.”

What Is the GENIUS Act and Why the Uproar?

The GENIUS Act (short for Government-Endorsed National Infrastructure for U.S. Stablecoins) gives broad legal authority to American companies and even the sitting President and Vice President to issue regulated stablecoins. Supporters say it brings needed structure to the fast-growing stablecoin market. But opponents believe it opens the door to financial chaos and unchecked political profiteering.

According to Warren and other critics, the law was heavily shaped by crypto insiders. She points out that President Trump, now directly linked to multiple blockchain ventures, stands to benefit immensely. In fact, Trump’s family already backs a suite of crypto projects including memecoins like Official Trump and Melania, a USD-pegged stablecoin (USD1) via World Liberty Finance, and a Bitcoin treasury housed under his media group.

What’s more alarming, say opponents, is that while members of Congress are barred from issuing stablecoins during their terms, the President and Vice President are explicitly exempted.

Chaos by Design?

Critics fear the Act could lead to a future where every major corporation has its own private digital currency. Imagine AmazonCoin, WalmartCoin, TeslaDollars all competing in the same marketplace, potentially bypassing banks, confusing consumers, and challenging the dollar’s unity.

Economist Barry Eichengreen compared this vision to 19th-century America’s “Free Banking Era,” when hundreds of banks issued their own currencies. The result? Chaos, fraud, and constant concern over whether your money was actually worth anything.

“This isn’t the future of money,” Eichengreen wrote. “It’s a return to financial disorder.”

Shawn Young, chief analyst at MEXC Research, agrees the warning signs are worth watching. In comments to crypto.news, he explained that while the GENIUS Act attempts to regulate stablecoins through audits and reserve standards, it lacks strong anti-corruption clauses and fails to address potential systemic risks.

“This bill makes gains in regulatory clarity,” Young said, “but it leaves the door wide open for ethical conflicts and poor oversight. That’s a serious blind spot.”

Echoes of the 2008 Crisis?

The comparisons to the CFMA are not just political jabs. When that bill passed in 2000, it stripped regulators of the power to oversee the derivatives market, paving the way for risky products like credit default swaps. Just eight years later, the house of cards collapsed.

The GENIUS Act, Warren warns, may be setting the stage for a similar crisis only this time, the tools are not derivatives, but digital dollars backed by private firms with little accountability.

“Donald Trump is the first president in American history to pass a law that lets him personally profit from regulating his own assets,”

Warren said.

“We’ve never seen this before and it’s a disaster waiting to happen.”

What’s Next?

So far, most Republicans and even some Democrats have stayed silent or cautiously supportive. But pressure is building. Financial watchdog groups like Americans for Financial Reform are calling for amendments to the GENIUS Act that would extend ethics rules to the White House and impose stricter controls on private stablecoin issuance.

Meanwhile, the crypto market is watching closely. Some investors are optimistic that stablecoin legislation will legitimize the industry. Others worry that too much corporate freedom and too little transparency could backfire, harming both markets and Main Street alike.

Whether the GENIUS Act leads to a stronger digital economy or a repeat of 2008 may depend on what happens next in Washington and who holds the power to print tomorrow’s dollars.