The crypto policy pursued by Donald Trump's administration is causing significant shifts in the financial world, posing a threat to the position of traditional banks. These changes could shift financial powers from Wall Street banks to tech giants.
Regulation and the Future of Cryptocurrencies
Congress is currently working on a formal legal framework for stablecoins, which could transfer control over financial transactions from Wall Street to Silicon Valley. It's anticipated that dollar-pegged stablecoins will function as real money in the US. However, stablecoins are uninsured, unlike bank deposits, and their value can fluctuate significantly, as seen with Terra.
Threats to Traditional Banks
If stablecoins become the preferred form of money holding for the public, traditional banks will lose their core asset — customer money. This could reduce the funds available for lending and undermine the Wall Street business model. Some banks are planning to release their own stablecoins, but they will be uninsured. The entry of big tech companies into this market could lead to financial ecosystems that bypass traditional banks entirely.
Investor and Global Reactions
The administration's suggestions of using Bitcoin as a strategic reserve led to a brief price boost, but haven't garnered significant backing. Analysts point to skepticism regarding its practical use as a national reserve. Central banks in some countries have already dismissed the idea due to volatility. Meanwhile, institutional investors are pulling back on Bitcoin and Ethereum futures, indicating waning interest.
Trump's crypto initiatives could significantly change the financial market, especially if widely adopted. However, many investors and countries remain cautious due to uncertainty and volatility.
