After meeting privately with a crypto industry leader on Tuesday, Trump criticised banks in a social media post, saying they were trying to meddle with a law he signed last year that widened legal avenues for adopting stablecoin in traditional finance. “The Genius Act was the USA’s first big step to make the United States the Crypto Capital of the World,” he wrote, adding that banks “should not be trying to undercut” the legislation and “need to make a good deal with the crypto industry.” Engineered to consistently trade at $1, like a cash equivalent, stablecoins have become a key asset in the crypto market by allowing traders to reduce the overall risk of their portfolios. They can trade out of wild price swings in the coins they bet on and into stablecoins, all while staying within the crypto blockchain.
As a result, stablecoins have grown to $300 billion in market value from roughly $20 billion in 2020. The Federal Reserve estimates they could be worth $3 trillion in five years.
Because stablecoins use Treasurys as the primary collateral to create this cash-like safety, cryptocurrencies have effectively flooded into the Treasury market, the central artery of the US-led global financial network.