Unlock stock picks and a broker-level newsfeed that powers Wall Street.
Sen. Elizabeth Warren and four other Democrats warned U.S. financial regulators they might soon confront “an extraordinary conflict of interest”: overseeing a cryptocurrency entity controlled by the sitting U.S. president and his family.
In a letter sent early Friday to the Federal Reserve’s vice chair of bank supervision, Michelle Bowman, and the acting comptroller of the currency, Rodney Hood, the senators pressed for answers on how they intend to regulate World Liberty Financial, the Trump family’s crypto project, and the stablecoin the company said this week it plans to launch.
-
This 4-Bedroom Ranch in N.J. Tells You Everything About the Lopsided Housing Market
-
How Trump’s Tariffs Are Hitting Big Car Producers, in Charts
Legislation advancing in Congress would create a regulatory framework for stablecoins, which function as digital dollars used widely to store cash or pay for purchases of other crypto assets. It would task the Fed and the Office of the Comptroller of the Currency with oversight responsibilities and specify rules on reserves and customer protections.
The Senate’s measure, the Genius Act, was already working its way through Congress when World Liberty unveiled its plans on Tuesday to issue its own stablecoin, USD1. Earlier this year, President Trump signed an executive order requiring all federal agencies, including financial regulators, to submit their rules and actions to the White House for approval.
The confluence of these events, the senators wrote, “presents an extraordinary conflict of interest that could create unprecedented risks to our financial system.”
A Fed spokesman had no immediate comment. Spokespeople for the White House and the OCC didn’t immediately respond to requests for comment.
Stablecoins aim to maintain a 1:1 exchange ratio with government-issued currencies, and store reserves in cash or cash-like assets such as Treasurys to keep the peg in place.
USD1 is the Trump family’s latest foray into crypto through World Liberty, an entity it launched in October as a decentralized finance, or DeFi, project. And World Liberty’s expansion comes as Trump has sought to make the U.S. what he calls the “undisputed bitcoin superpower and the crypto capital of the world.” DeFi is an umbrella term that refers to financial services such as borrowing, lending and trading automated by software rather than human intervention, and that operate outside the mainstream financial system.
Earlier this month, Trump told the two dozen executives who attended his inaugural White House crypto summit that he hoped lawmakers would send stablecoin legislation to his desk before Congress’s August recess. Bo Hines, a senior White House adviser on digital assets, said a bill could be on the president’s desk for his signature by May.
The Senate Banking Committee approved the Genius Act with an 18-6 vote, including the support of five Democrats, and sent the bill to the Senate floor for debate. Three of the five Democratic senators who signed Friday’s letter to the bank regulators, Sens. Warren of Massachusetts, Chris Van Hollen of Maryland and Jack Reed of Rhode Island, voted against the bill in the banking committee. Sens. Cory Booker of New Jersey and Ron Wyden of Oregon aren’t on the committee.
Industry executives say the regulatory system imposed by legislation might encourage more financial firms to issue U.S. dollar-backed stablecoins and further integrate the tokens into the country’s financial system.
On Wednesday, financial-services conglomerate Fidelity Investments said it is testing a stablecoin, although it has no immediate plans to launch one.
Write to Vicky Ge Huang at vicky.huang@wsj.com
Weʼre unable to load stories right now.