Yes, 2024 was quite a milestone year for crypto. In the early part of the year, the value of Bitcoin surged from around $40,000 in January to surpass $60,000 in March. This surge was noteworthy because Bitcoin had earlier plummeted to $16,000 after the Sam Bankman-Fried FTX scandal in November 2022.

Under the stewardship of the so-called crypto nemesis, Gary Gensler, the Securities and Exchange Commission (SEC) had launched initiatives tightening regulations around crypto. This included a slew of lawsuits against big-name companies like Coinbase and Kraken, the software firm Consensus, and a payments company called Ripple, which were accused of selling unregistered securities.

However, the SEC also gave its seal of approval to the listing and trading of a number of Bitcoin exchange-traded funds (ETFs) run by banks and asset management funds in January 2024, later extended to Ethereum funds. This was a big factor driving that early surge. These ETFs are a basket of assets that track Bitcoin and Ethereum prices and can be bought and sold like shares on an exchange.

While Bitcoin ETFs were already trading in Bitcoin futures, regulatory approval expanded the terrain, so it was a watershed moment in mainstreaming crypto that opened the floodgates. There was an influx of new investors and a growing encroachment of Wall Street into crypto trades. The ETFs included big players like BlackRock, which launched its crypto ETF, raking in billions.

Since this trading began in January 2024, these ETFs have seen about $36 billion worth of inflows, and the BlackRock Bitcoin fund ballooned to $60 billion. There was euphoria, and investors dismissed all the scandals and turmoil that had roiled the crypto sphere as they embraced this new frontier of profitmaking. One sign of this growing momentum was the heating up of battles over regulation. There was a big surge in industrial lobbying to steer congressional legislative efforts so as to empower and legitimize crypto.

The breaking of the $100,000 mark for Bitcoin in December signals the changing terrain under the new US presidential administration, which has now embraced crypto with much greater gusto. It has nominated crypto enthusiasts for key administrative posts with the slogan of making the United States the cryptocurrency capital of the world. There is greater support and regulatory latitude, which has expanded the possibilities for creating and promoting crypto products, drawing in more retail and institutional investors who are constantly looking for new frontiers, especially at a time when things in the real economy have not been looking so good.

The market capitalization of crypto was $1.7 trillion at the end of 2023. By March 2024, when this regulatory change happened, it had risen to $2.7 trillion. It peaked at $3.5 trillion in December, when the prospect of a new regime was there.

Right now, it’s about $2.8 trillion, and Bitcoin dominates with about $1.8 trillion. Approximately 60 percent of the crypto market is accounted for by Bitcoin. By way of comparison, the combined market capitalization of the four largest US banks — JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup — reached about $1.5 trillion at the beginning of 2025.

Despite the claims and promises of decentralization, the actual functioning of the crypto sphere is dependent on large, centralized exchanges where you buy and sell crypto assets. This includes the likes of Coinbase, Kraken, and Binance, as well as centralized lending platforms such as Block (formerly Square) and centralized investment vehicles like Grayscale and Galaxy. You also have big players in Bitcoin mining like Riot and Marathon Digital, while asset management funds such as BlackRock and Fidelity play a major role in the ETF sector.

Even before the 2024 elections, there was a lot of money being spent by the crypto lobby in terms of steering legislation. In 2022, there was lobbying around the infrastructure bill. They spent $8.9 million to defeat a proposal that was intended to crack down on tax avoidance by making it mandatory for crypto platforms to report all transactions and capital gains to the Internal Revenue Service.

OpenSecrets, a nonprofit group that tracks the role of money in politics, recorded that the crypto lobby increased its spending from $2.5 million in 2020 to $22 million by the 2022 election cycle. At that time, FTX, Bankman-Fried’s company, was one of the biggest donors. In 2024, crypto’s role was even bigger, and you could think of it as a coming-of-age moment for the crypto lobby. It effectively rebuilt its political influence after the FTX fiasco.

This last election was seen as a critical one for the industry. It had been pushing hard for a regulatory overhaul that would legitimize crypto with light-touch government oversight. There are three big super PACs from the crypto sector: Fairshake, Defend American Jobs, and Protect Progress. They spent about $133 million to boost the campaigns of crypto-friendly congressional candidates in the 2024 cycle.

According to Public Citizen, another nonprofit group, about 44 percent of all corporate money that was contributed in the 2024 cycle came from crypto backers. Before the elections, a spokesperson for Fairshake, Josh Vlasto, boasted that they would have the necessary resources to “affect races and the makeup of institutions at every level” as part of their effort “to build a sustainable, bipartisan crypto and blockchain coalition.”

In one race, the crypto lobby devoted $40 million to defeating Sherrod Brown, the former chair of the Senate banking committee and a strong opponent of crypto-friendly legislation, helping to replace him with Republican Bernie Moreno, a blockchain entrepreneur. The lobby also helped defeat Jon Tester, a long-serving Montana Democrat and another crypto skeptic in the Senate.

Crypto has a presence across party lines. New York senator Kirsten Gillibrand is one Democratic politician who has received its blessing and is now playing a very important role in cosponsoring the so-called GENIUS Act, which is designed to regulate the issuing of stablecoins, a type of cryptocurrency where the value of the digital asset is pegged to a reference asset like the dollar or a precious metal. For all its libertarian facade, crypto finance is deeply embedded in Washington politics.

In terms of its administrative setup, Trump’s SEC chair, Paul Atkins, has been on the advisory board of a blockchain company, Securitize, and the crypto trade group Digital Chamber. Commerce secretary Howard Lutnick headed the Wall Street firm Cantor Fitzgerald, which has deep ties to Tether, the stablecoin giant. Treasury secretary Scott Bessent is a vocal supporter of crypto.

One of the Trump administration’s first acts was an executive order establishing a working group on digital asset markets. Soon after, the SEC dropped its investigations into OpenSea, a non-fungible token (NFT) marketplace, and Robinhood, the infamous electronic trading platform. It also dismissed all claims against Coinbase. All of these actions had been opened under the former SEC chair, Gensler. In addition, the SEC announced that meme coins, like the recently launched $Trump, would no longer be considered securities and would therefore be exempt from SEC oversight.

Trump has rescinded a rule put in place under the previous administration called SAB 121. This was a legally nonbinding accounting guidance in light of the risk associated with cryptocurrency assets. It required institutions to treat digital tokens held in their custody on behalf of clients and customers as liabilities that had to be recorded on their balance sheets, as a way of making sure the risks were not hidden off the balance sheet.

Financial actors saw this rule, which was just a guidance and not a legal stricture, as an excessive operational and regulatory burden that made it costly for conventional banks to offer custody services for Bitcoin and crypto. By repealing it, Trump has opened a path for those banks to woo crypto clients and develop new digital assets.

Trump has also revoked a measure that was embedded in Joe Biden’s infrastructure bill, requiring decentralized crypto operators to disclose all transactions and proceeds — another bonanza. Right now, we have the proposed stablecoin act, GENIUS. This seeks to institute a framework enabling the growth of dollar-backed stablecoins with relatively loose requirements and oversight.

The idea is that states would regulate stablecoin issuers smaller than $10 billion, while issuers above that threshold would be federally regulated. Under this model, monitoring will of course be light-touch, with clear limitations on supervision, examination, and enforcement. For instance, all of the regulatory requirements for conventional banks — capital cash buffers, or a sensible bankruptcy framework — would be dispensed with. The proposed legislation also has a loophole for offshore firms like Tether.

More important is that it grants nonfinancial companies the ability to issue stablecoins. This is a frontier that Big Tech firms like X and Meta have been actively seeking to exploit. Senator Elizabeth Warren has said, in reference to this legislation, that “Republicans are setting the stage for the richest man in the world to issue his own currency that competes with the US dollar.” On a side note, World Liberty Financial, a cryptocurrency group backed by President Trump and his sons, has just announced the launch of USD1, its own stablecoin.

Stablecoins are seen as the more stable portion of crypto’s Wild West, but this area is being opened up in dangerous ways. We can also expect a market structure bill based on the earlier Financial Innovation and Technology for the 21st Century Act, which had stalled under the previous administration. This is basically going to take regulatory enforcement away from the SEC and place it in the hands of the Commodity Futures Trading Commission, which is seen as more permissive. In addition, ways will be found to allow crypto funds to access banking services directly.

What all these policies boil down to is a relaxation of restrictions on the issuance, use, and trading of crypto assets, while at the same time easing constraints on banks and fund managers in dealing with these assets. Crypto is being brought out from the shadows to the center stage, and with minimal regulatory oversight. Pension funds like the State of Michigan Retirement System and the State of Wisconsin Investment Board are already holding Bitcoin funds.

This is another major plank of the crypto agenda. The establishment of the Strategic Bitcoin Reserve would give Bitcoin an official imprimatur and extend the public safety net by putting a floor under Bitcoin prices. The fund will be, in a sense, a base for conducting quantitative easing, but this time for Bitcoin. The artificial intelligence and crypto czar David Sacks has called this reserve a “digital Fort Knox” for cryptocurrency, likening it to digital gold.

The problem with this scheme is that, in effect, the public exchequer would take on the risks associated with Bitcoin price volatility. The history of Bitcoin has seen spectacular movements. You need a fund with a large balance sheet that is going to be willing to buy and sell in order to contain this volatility.

The concern that taxpayers will be left holding the bill has been dismissed. Trump’s team has promoted the idea that the fund is going to be budget neutral, so any new outlay will be offset by reduced spending elsewhere. That in itself is a scary prospect, because if taxes aren’t going to be raised, where is spending going to be cut?

The other way of funding it is creating money out of thin air. One proposal is that the Bitcoin owned by the Department of the Treasury, most of which has been forfeited as part of criminal or civil asset proceedings, is going to be handed over. Another is an accounting gimmick, which the economist Nathan Tankus has nicely explained, whereby the Federal Reserve will relinquish its existing gold certificates — not actual gold, but certificates that are claims on gold — and buy them back at a new, fair, market-value price. It will then pass on to the Treasury and the Bitcoin reserve fund the difference between the old price and the new one.

Even if we ignore the fact that the crypto sphere is rife with fraud and graft, we have to recognize that crypto is a segment of finance that is completely detached from funding production and real investment. Finance is a complicated and contradictory beast. It is essential plumbing for the capitalist economic system, but it is also the basis of speculation.

Crypto is a sphere that is completely about speculation. It is finance for its own sake, and this reserve is extending a safety net to this sphere while giving it free rein to pursue speculation. This is a setup for disaster.

The short answer is that not enough has been learned. The crash of 2008 did not lead to any reining in of securitization. That was at the heart of the shadow banking system that unraveled when the subprime mortgage market collapsed. In a similar way, the ructions in the crypto sphere have not diminished its attraction or even led to the clipping of its wings.

If anything, the tendency for financial fragility has been exacerbated with the mainstreaming of crypto and the permissive attitude of regulators, despite the highly speculative nature of cryptocurrency and the perils of exposing unsophisticated or retail investors to this volatility. Stablecoins, which facilitate transfers across crypto platforms and are the critical link with finance, pose special systemic financial risks. If there’s a run on a stablecoin, it could set off a chain of events that would destabilize various parts of the traditional financial system.

In the turmoil of 2022, we saw how the effects carried over from one crypto fund to another. Now it can also go from crypto to conventional banking. A Bank for International Settlements study has found that when it comes to stablecoins, it doesn’t matter whether they are backed up by the dollar or some other fiat currency, commodities, or other crypto assets. They may be less volatile than other crypto assets, but not a single one has been able to maintain parity with its peg at all times.

That is the key thing about a stablecoin. It has to maintain parity with a peg, yet not one of them has been able to. When this happens, the impact will be a run on the stablecoin. Depositors will pull out in a way that is similar to a conventional bank run, magnified by social media effects, as we saw with Silicon Valley Bank in March 2023.

Furthermore, unlike conventional banks, stablecoins have not been subject to regulatory oversight or scrutiny to ensure they have enough credible reserves to maintain their peg. When liquidity evaporates and the stablecoins collapse, this will not only rupture the workings of the crypto finance sector, where they are a critical link. There will also be potential spillovers into the conventional financial sector.

If there is a fire sale of conventional assets that are backing the stablecoins in order to meet the deluge of redemptions, there will be a panic that will spread to these markets. If the coins are backed by US Treasuries, the spillovers would affect the US Treasury market, which is the anchor of the US-led global financial system. This would necessitate the deployment of the financial heft of the US Federal Reserve to contain the unraveling. As well as a Bitcoin reserve fund, you’ll need to have a stablecoin reserve fund.

As crypto finance grows and permeates conventional finance, the aftershocks of crypto convulsions will not only be more widespread — they will also have more profound repercussions. Just as the global financial crisis forced the Federal Reserve to bring all of its financial power into play to rescue shadow banking, when this crisis strikes again because of crypto markets, the Fed will be compelled to extend its backstop to these stablecoins in order to contain systemic crashes and prevent the implosion of the financial system, both crypto and conventional.

The bigger the speculative bets, the larger the rescue that is necessary. This enables even greater gambles to be made, and things become more intractable. Contagion is going to spread, and the so-called decentralization of finance through crypto is going to mean that more and more funds and more and more people are affected. These crypto gambles would then have to be subsidized by the state, which is a truly scary prospect.

Javier Milei set this off with a post on X to his nearly four million followers, expressing his support for a new meme coin, $Libra, which he claimed would promote economic growth and fund small businesses in Argentina. It was a typical pipe dream of being able to create funds out of nowhere and overhaul the Argentine economy. But here it was actually about pumping money into a few people’s pockets.

$Libra spiked to a level of about $5 soon after Milei’s tweet. Hours later, it collapsed from $5 to 50 cents, because approximately $100 million of the investments were quickly withdrawn. The president quickly deleted his post, and critics accused him of being complicit in a classic rug-pull scam. That’s when an influential person touts a financial asset, drumming up investors; money flows in, the price inflates; and then, while the price is high, the person who started it just absconds or sells.

You had the president of a country seen as being complicit in this rug-pull exercise. There was an outcry and a corruption probe, including a push for impeachment. But Milei doubled down, saying he had only shared the tweet and not promoted it. He also said, “If you go to the casino, you lose money. What’s the complaint?” There was no recognition that the head of state had actively promoted the idea of going to the casino.

In the meantime, the Argentine stock market and the peso also fell. Milei has developed a reputation for tackling Argentina’s debt and inflation crisis with a particularly perverse and autocratic brand of austerity. With the fall in the stock market and the value of the peso, Milei returned to the International Monetary Fund for yet another loan while bypassing the legislature in order to boost his economic agenda and electoral prospects.

This is a depressing story of grift, graft, and greed. But it’s also a sign of what to expect from the melding of crypto and political power that is being celebrated right now by the regime in the United States.

The most significant factor is the mainstreaming of crypto, with the interpenetration of conventional and crypto finance and the extension of the state’s guarantee to the crypto sector. Apart from this, the basic elements of crypto’s plumbing are likely to be embedded and adopted in the conventional financial system, including things like blockchain, smart code, and tokenization.

Bitcoin was launched on a libertarian promise of depoliticizing money by privatizing it and removing it from the control of the state and big banks alike. Yet the financial revolution it has engendered has consolidated the power of cryptocurrency and embedded it within the machinery of the state.

There is another very significant aspect of the recent developments. Big Tech is embracing finance and cryptocurrency as a way of leveraging its digital infrastructural capacity. BlackRock has announced plans to launch an artificial intelligence investment fund in partnership with Microsoft and MGX, an Abu Dhabi–based investment company, to build infrastructure (including data centers) servicing AI. Google has signed a ten-year cloud computing agreement with Chicago Mercantile Exchange, and Amazon Web Services has struck a partnership with New York’s Nasdaq.

As part of this agenda, a Silicon Valley–Washington nexus is being grafted onto the existing Wall Street–Washington nexus that had implicated the state and the Fed in bailing out Wall Street from all the consequences of its risk-taking over and over again. We are seeing the extension of the doom loop that ties the state to finance and now to Big Tech spreading to crypto and financial technology in order to harness the immense possibilities of monetizing and weaponizing the data and digital footprints of everyday life in the pursuit of private profit.

The way this nexus has developed in the United States is quite distinct from what we see in China. There the big Chinese tech conglomerates entered the field of financial services in a context where the strong arm of the state retains the upper hand in the balance of power and tries to enforce restrictions on credit. The peculiar form this nexus is taking in the United States is a development that has potential implications on the global front.

The Biden administration had begun to explore a central bank digital currency to preserve and expand dollar hegemony and preempt China’s first-mover advantage in the sphere. It wanted to reinforce US leadership in the global financial system at the technological frontier, so as to assert control over the global rules and standards for digital finance and crypto technology.

The proposed GENIUS Act suggests that the present regime is seeking to undergird global dominance by using stablecoins backed by US Treasury bills rather than a central bank–issued digital currency as a tool of monetary and geopolitical policy. This is how it intends to preserve the dollar’s role as a world reserve currency while limiting foreign purchases of US Treasury bills in order to prevent too much appreciation of the dollar, which is a concern of the Trump administration.

It wants to do this amid the growing uncertainties and fissures of the global order that we are seeing. Its chosen path is giving a boost to less regulated private instruments, driven by profit motives, as a linchpin of the international financial system. The fragility of this setup cannot be overemphasized. At the same time, there is a growing sense of disquiet and restiveness around the world about the dollar’s global rule and the possibilities of its further weaponization.

This has also led to an exploration of central bank digital currencies and alternative crypto-technology payment channels by the rest of the world. This is going to be a space where the contours of the evolving global order will be shaped. The implications for the emergent Silicon Valley–Wall Street–Washington nexus remain to seen.