Trump's Tariff War Sparks Bitcoin Volatility, Congress Rushes Crypto Legislation
2min read Bitcoin and crypto prices have experienced significant volatility this week as traders express concern that Donald Trump’s tariff war could trigger a "crisis scenario" for the bitcoin price. The bitcoin price has outperformed stocks, with U.S. Treasury Secretary Scott Bessent issuing a surprise endorsement.
Ask Aime: What could be the impact of Trump's tariff war on Bitcoin's price and future trends?
As BlackRock’s chief executive issues a near-$1 trillion warning to the U.S. dollar, Wall Street banks are bracing for an “existential” bitcoin and crypto crisis as Trump pushes for radical new legislation. The U.S. president has embraced bitcoin and crypto, which could pose an "existential threat" to the financial system as the bitcoin price climbs.
Arthur Wilmarth, a professor emeritus of law at George Washington University, stated that this poses an "existential threat to the banking industry, as well as to the financial system writ large," adding that taxpayers could ultimately be on the hook.
Congress is rushing to pass major new crypto legislation in the form of a stablecoin bill that could see interest paid out to people holding the dollar-pegged cryptocurrencies. Bo Hines, who leads Trump’s Council of Advisers on Digital Assets, said last month that the White House wants a stablecoin bill passed before August.
A stablecoin bill currently headed to the House floor prohibits stablecoin issuers from paying out interest to holders while a twin bill in the Senate excludes interest on some types of stablecoins but falls short of banning them. If permitted, higher-than-average interest stablecoin accounts could see people move their money out of insured bank accounts, opening them up to risk if those crypto companies were to fail.
Ask Aime: What impact will the bill banning stablecoin interest payments have on the bitcoin market?
Hina Sattar Joshi, digital assets sales director at TP ICAP, commented that "Stablecoins are emerging as the first real blockchain use case to be fully integrated into traditional finance, and we are witnessing the early stages of this transformation." She added that "Strong global momentum in stablecoins is likely to attract institutional interest in a digital asset that has long-term growth potential while acting as a credible bridge between traditional assets and crypto."
As the two stablecoin bills are brought together by Congress in the coming weeks, lawmakers will have to choose—potentially deciding whether stablecoins will become the de facto checking account tool for both banks and crypto companies or if they’ll remain a sideshow.
The stablecoin market, led by Tether’s $144 billion USDT, has grown rapidly in recent years, with financial technology companies and Wall Street giants from paypal to bank of america rushing to launch their own stablecoins, enticed by the massive $13 billion of profit Tether printed in 2024 as a result of the bitcoin, gold, U.S. Treasury bonds and other financial instruments it holds to back USDT.
Brian Moynihan, Bank of America chief executive, said in an interview at the Economic Club that "It’s pretty clear there’s going to be a stablecoin. If they make that legal, we’ll go into that business."
Coinbase chief executive Brian Armstrong posted to X earlier this week that "The government shouldn’t put its thumb on the scale to benefit one industry over another. Banks and crypto companies alike should both be allowed to, and incentivized to, share interest with consumers."
