Donald Trump’s Crypto Strategy: What It Means for Global Finance

For years, U.S. crypto policy has been marked by uncertainty, with regulators debating how to handle digital assets. 

Donald Trump’s executive order puts stablecoins at the center of U.S. financial policy. It supports lawful, dollar-backed stablecoins while explicitly banning central bank digital currencies (CBDCs).

The move signals a push for innovation and financial autonomy while reinforcing the U.S. dollar’s dominance in the digital economy. This move could influence both domestic and international financial landscapes. 

CCN interviewed Lambis Dionysopoulos, a PhD candidate in finance and lecturer at Henley Business School, the University of Reading, and the University of Nicosia. Dionysopoulos specializes in digital currencies and policy.

He shared his insights on Trump’s executive order, which prioritizes the promotion of lawful, dollar-backed stablecoins, and its broader impact on the crypto landscape. Dionysopoulos discusses the implications of Trump’s order, regulatory challenges, and the role of stablecoins versus CBDCs.

Trump’s Stablecoin Push: A Game-Changer?

Dionysopoulos describes Trump’s move as “very significant for stablecoin providers,” who have long operated in a regulatory grey area. He notes that while the EU’s MiCA framework remains restrictive for some, Trump’s approach “leaves room for their lawful operation and the ability to find product-market fit.”

Beyond regulatory relief, he highlights an overlooked aspect: “Stablecoin issuers are among the world’s largest holders of U.S. debt (18th, to be exact).” He explains that as stablecoins grow, so does demand for U.S. Treasuries, reinforcing the dollar’s dominance in the crypto space. 

He further notes, “the demand for Treasuries, especially at a time of tense economic relations between the US and other countries, and the dollar’s stickiness in this new financial space should not be understated.”

“Finally, love him or hate him, Trump is a notoriously transactional president”, he states. 

Dionysopoulos points out that “replacing a CBDC, which would be subject to strict oversight by numerous branches, with privately operated stablecoins gives him plenty of room for quid pro quo,” referring to potential transactional exchanges or political deals where backing stablecoins could benefit entities aligned with Trump’s administration.

“Anyone not convinced of this appetite should look at Trump-affiliated World Liberty Financial, issuer of his memecoin, which has already partnered with Ethena Labs, the issuer of the stablecoin USDe, essentially a fancy on-chain Treasury. Ethena also recently launched USDtb, backed by BlackRock’s BUIDL fund, which tokenizes Treasuries. Liberty Financial also bought hundreds of thousands dollars worth of ENA, Ethena’s governance token”, he added. 

Challenges in Ensuring Stablecoin Growth

Dionysopoulos explains stablecoins’ evolution from on-chain collateralized debt positions to today’s widely used fiat-backed models. He describes how it started: “Users would lock, say, $150 worth of ETH and borrow up to $100 worth of stablecoin (DAI) against it.”

This method relied on crypto-backed loans, where users had to overcollateralize their holdings to issue stablecoins.

After 2020, the demand for greater stability led to the rise of USDt and USDC, which are backed by “supposedly highly liquid financial instruments.” Unlike the earlier system, these stablecoins are pegged to the U.S. dollar and backed by reserves like cash or short-term U.S. Treasuries.

The issue, he argues, lies in trust: “Unless you trust the companies’ and their auditors’ disclosures, there is no way to verify if these are actually safe instruments.”

He points out that before MiCA, stablecoin issuers could diversify into riskier assets. He also critiques newer stablecoin models, stating, “Newer approaches to stablecoins, like USDe, have simply too many dependencies on things that could go wrong.”

Stablecoins vs. CBDCs: A Decentralized Alternative?

Dionysopoulos doubts that stablecoins can rival CBDCs as a decentralized alternative to digitizing national currencies. “No, because popular stablecoins are, in fact, very centralized,” he says. He adds that retail CBDCs would likely rely on existing financial institutions, making them “no more privacy-invasive than your existing relationship with your bank, PayPal, or e-money app of choice.”

Stablecoins, however, “are not well integrated into this regulatory framework”. Dionysopoulos does not believe they offer better privacy protection than commercial banks. He adds that decentralized stablecoins face numerous technical and adoption challenges that limit their viability.

Trump’s Ban on CBDCs and Its Global Impact

Trump’s administration explicitly prohibits the creation or use of CBDCs, citing threats to freedom and financial stability. How might this stance affect the global trajectory of CBDC development?

Dionysopoulos notes that retail CBDC momentum has slowed in developed markets, where digital payments are already widespread. However, wholesale CBDCs remain a priority, especially as an alternative to the U.S.-controlled financial system.

He argues that geopolitical concerns are a major factor: “Following the sanctions, asset freezes, and SWIFT cut-offs imposed on Russia after its invasion of Ukraine, governments worldwide, especially those outside the so-called ‘Western sphere of influence,’ have realized what it means to operate under a U.S.-dominated financial system: They can literally be cut off at the press of a button.”

He suggests that Trump’s trade and tax policies could accelerate cross-border CBDC initiatives, particularly among countries that view the U.S. as an economic adversary. He also references recent statements from European Central Bank officials who share these concerns.

The National Digital Asset Stockpile: A Strategic Move?

Trump’s order proposes the creation of a ‘national digital asset stockpile’ potentially sourced from lawfully seized cryptocurrencies. Dionysopoulos acknowledges the growing enthusiasm for the idea of national cryptocurrency reserves but warns against the implications. 

He states, “What hides beneath calls for Trump to not sell seized crypto is widespread enthusiasm for the idea of the U.S. and other major nation-states creating so-called ‘strategic cryptocurrency reserves,’” Dionysopoulos said.

While proponents argue that such reserves could boost economic security, he is skeptical: “I am personally wary of any large entity, let alone the world’s biggest superpower, amassing vast reserves of cryptocurrency, given the economic leverage this would afford them and the potential attack vectors it opens against crypto.”

He urges the crypto community to focus on decentralization, privacy, and neutrality rather than price speculation.”The response to these calls, as a crypto community, should be to double down on developing techniques for maximal decentralization, privacy, and credible neutrality in the most scalable way and disregard everything else, price chief among them, as a distraction”, he concludes. 

As debates around stablecoins, CBDCs, and crypto regulations continue, experts like Dionysopoulos play a key role in shaping the discourse, ensuring that the conversation is grounded in financial reality rather than political rhetoric.