President Donald Trump is pushing crypto into the mainstream, and Wall Street is losing its grip on finance because of it. The Trump administration is laying out regulatory groundwork that could completely move financial power from big banks to tech giants, with stablecoins at the center of it all.
Right now, Congress is working on a legal framework that would allow dollar-pegged stablecoins to function as real money in the United States—a decision that will likely sideline Wall Street and give Silicon Valley control over financial transactions.
If the legislation passes, the digital dollars will compete directly with traditional bank deposits, drawing money away from Wall Street. Though admittedly, unlike bank accounts, stablecoins aren’t insured, and history has shown us that they don’t always hold their value.
And when stablecoins collapse, investors lose everything—just ask anyone who held Terra before it crashed or customers locked out of their Voyager and Synapse accounts.
Stablecoins could wipe out traditional banks
If folks start holding stablecoins instead of bank deposits, then of course Wall Street will lose its most valuable asset, which is customer money.
Banks rely on deposits to fund loans, but if cash moves into crypto-backed stablecoins, they lose that capital, and that could force banks to cut back on lending, putting Wall Street’s entire business model at risk.
Some financial institutions like JPMorgan and Bank of America have already announced plans to issue their own stablecoins, but they’ll be uninsured, unlike their regular accounts. This means no FDIC protection, so if a bank-backed stablecoin collapses, investors will be on their own.
If Apple, Amazon, or Meta enter the stablecoin market, they could wipe out traditional banks entirely, creating all-in-one financial ecosystems where users can spend, borrow, and save—all without touching a traditional bank account.
The Consumer Financial Protection Bureau (CFPB), one of the few regulators keeping an eye on tech’s role in financial services, has been gutted by layoffs. Acting director Russell Vought has ordered a freeze on regulations, including rules meant to protect consumers from crypto-related fraud and cyberattacks.
Without oversight, blockchain-based finance could become a cybersecurity nightmare. Unlike traditional banking, there’s no clear authority responsible for protecting blockchains from hacks. If a stablecoin network gets hacked, or if a major crypto platform crashes, who steps in to fix it? The answer right now? No one.
Meanwhile, Trump’s crypto policies are also starting a global debate on national crypto reserves. The administration is pushing Bitcoin as a “strategic crypto reserve”, arguing that the U.S. should hold Bitcoin alongside gold as a national asset.
Investors briefly pushed Bitcoin higher on the news, but JPMorgan analyst Nikolaos Panigirtzoglou said the rally didn’t last. “There’s skepticism about congressional approval for such a strategic crypto reserve,” he wrote in a note to investors on Wednesday.
Panigirtzoglou also pointed out that Bitcoin reserves have failed to gain traction in U.S. states like Montana, North Dakota, South Dakota, and Wyoming, where lawmakers have rejected proposals due to concerns about risk and volatility. Central banks in Switzerland and Poland have also said no to the idea.
At the same time, institutional investors are pulling back from crypto markets. According to JPMorgan, Bitcoin and Ethereum futures contracts on the CME exchange are shrinking, and traders are increasing short positions—betting that prices will fall. “Institutional investors appeared to have also reduced their positions due to lack of positive catalysts and momentum decay,” Panigirtzoglou said.
Another warning sign is Strategy, the company formerly known as MicroStrategy, which recently raised $2 billion in convertible debt. Crypto miners like Mara Holdings have also issued massive amounts of stock and debt, helping to inflate Bitcoin’s price after the election. But investor demand is fading.
“The terms of these deals are increasingly more investor-friendly over the past month,” Panigirtzoglou said, meaning investors are becoming more selective and cautious.
Clearly, Wall Street is scrambling to keep up with Trump right now, but it might be too late. Guess they should’ve made the jump into crypto ages ago.
