Sen. Elizabeth Warren Calls President Donald Trump-Backed Stablecoin a Potential Threat to National Security

A group of Senate Democrats have pulled their support for a Republican-led legislation that would create a framework for private stablecoins in the U.S., raising concerns about a foreign deal that reportedly involves a Trump family-backed stablecoin.

What Happened: A group of Senate Democrats, including Sen. Elizabeth Warren (D-Mass.), have expressed concerns about a deal that reportedly saw Abu Dhabi investment firm MGX choose USD1, a stablecoin available on Ethereum (CRYPTO: ETH) and BNB Chain (CRYPTO: BNB), to facilitate a $2 billion cryptocurrency exchange agreement with Binance (CRYPTO: BNB).

“Trump's stablecoin is shady and a national security risk. He's cashing in on foreign crypto deals—and weakening guardrails that protect our advanced technology,” said Sen. Warren via X.

“Don't let them get away with it. I'm urging the Senate to reject passing the GENIUS Act without amendments to block this corruption.”

Interestingly, Sen. Warren’s post includes a link to an Axios report, which stated that a group of Senate Democrats had written to President Donald Trump urging him to divest from the stablecoin ahead of his Middle East trip. The move was seen as an attempt to scuttle the deal with Binance, which reportedly posed concerns for national security due to the involvement of a Chinese-owned entity in the investment firm MGX.

However, despite the letter, President Trump continued with the investment, and the Senate Democrats ultimately pulled their support for the stablecoin legislation.

The White House didn’t immediately respond to Benzinga’s request for comment.

Why It Matters: A group of 10 Senate Democrats, in a letter to Senate Banking Committee Chairman Tim Scott (R-S.C.), had previously announced their support for the bipartisan legislation to create a framework for stablecoins.

The bill, part of broader efforts to regulate cryptocurrencies, was largely based on a proposal by Sen. Bill Hagerty (R-Tenn.), a member of the Banking Committee.

However, the lawmakers pulled their support for the bill after concerns arose about a subsidiary of the firm behind the stablecoin, World Liberty Financial, entering into an agreement with an entity partly owned by a Chinese state-owned investment firm to facilitate a $2 billion investment in Binance.

The Trump family has a 60% stake in World Liberty Financial, with the former president’s son, Eric Trump, serving on the board.