Trump Davos Calls Out: Make America the Crypto Capital, Signing the Genius Act is a Strategic Move

Trump Reaffirms “Crypto Capital” Strategy to Counter China at Davos

U.S. President Trump reiterated at the World Economic Forum (WEF) in Davos that he is committed to strengthening America’s position as the “Global Cryptocurrency Capital,” emphasizing this as a means to beat China in the digital asset arena and ensure U.S. market dominance. Trump stated that cryptocurrency policy is a top priority on his agenda, mainly for two reasons.

First is political considerations; he openly admitted that promoting cryptocurrency legislation has garnered him significant political support. This frank acknowledgment is rare and demonstrates Trump’s high regard for the political influence of the crypto community. Looking ahead to the 2024 election, the crypto industry has invested $260 million through super PACs like Fairshake to support friendly candidates, playing a crucial role in key state races. The strong backing from the crypto industry partly stems from his promise to push for friendly legislation and regulatory reforms.

Second is strategic; Trump emphasized that China also covets this market, so the U.S. must act—similar to its approach in artificial intelligence (AI)—to lock in market advantages and prevent China from gaining the upper hand. This “U.S.-China competition” narrative is highly persuasive because it elevates cryptocurrencies from speculative assets to national strategic resources. In AI, the U.S. has maintained its lead over China through export controls, technology bans, and massive investments. Trump aims to replicate this strategy in the crypto space.

He pointed out that this is part of the reason he signed the milestone Stablecoin Act, the “GENIUS Act,” last year. He further revealed that Congress is currently working on broader cryptocurrency market structure legislation, with two Senate committees advancing related bills. He hopes to sign new legislation soon to improve the regulatory environment for cryptocurrencies in the U.S.

The Dual Logic of Trump’s Crypto Strategy

Political Motivation: Crypto industry provides huge political donations and votes, promoting legislation to solidify support base

Strategic Competition: Positioning cryptocurrencies as a technological battleground against China, similar to AI competition

Legislative Action: Signed the “GENIUS Act” Stablecoin Bill, pushing for broader market structure legislation

Time Sensitivity: Publicly called on Congress at Davos to accelerate, demonstrating strong political will

From a geopolitical perspective, Trump’s narrative is not entirely exaggerated. Although China banned cryptocurrency trading in 2021, it has invested heavily in blockchain technology, digital yuan (CBDC), and Web3 infrastructure. Hong Kong, as a Special Administrative Region of China, is becoming an Asian crypto hub, attracting numerous exchanges and projects. If the U.S. does not take proactive measures, it could indeed lose its leadership position in future digital financial competition.

Banking Industry Pushback: $6 Trillion in Deposit Outflows Crisis

While Trump has high hopes for the “GENIUS Act,” the bill has sparked considerable controversy in traditional finance circles. The American Bankers Association (ABA) community banking committee has written to Congress warning that loopholes in the bill could allow stablecoin issuers to indirectly pay interest through partners, potentially crowding out bank deposits.

Bank of America CEO Brian Moynihan also warned during earnings calls that if laws permit stablecoin issuers to pay interest, up to $6 trillion in deposits could flow out of traditional banks. This figure is staggering—about one-third of total U.S. bank deposits. Such a massive outflow could cause systemic shocks to the U.S. financial system.

Bankers worry that deposit outflows would weaken banks’ ability to lend to small and medium-sized enterprises, farmers, and homebuyers, raising overall borrowing costs. Banks rely on deposit collection and lending to earn interest spreads; if deposits decline significantly, they may be forced to raise deposit rates to retain funds or cut back on lending. Either way, borrowing costs would rise, negatively impacting the real economy.

Currently, community banks are calling for amendments to the bill to prevent regulatory arbitrage, intensifying the legislative competition between the crypto industry and traditional banking. From an political economy perspective, this is a classic case of emerging versus established industries vying for policy resources. The crypto sector has the advantage of innovative narratives and political donations, while banks possess deep political connections and systemic importance arguments. How Congress balances these interests will determine the long-term direction of U.S. cryptocurrency policy.

Although the U.S. “GENIUS Act” prohibits token issuers from offering stablecoin yields, third-party providers like Coinbase can still legally offer rewards. This loophole is precisely what banks fear most. While issuers cannot directly pay interest, indirect yield offerings through third-party platforms are effectively equivalent. This regulatory arbitrage could give stablecoins a competitive edge over bank deposits.

Core Concerns of the Banking Industry Regarding the “GENIUS Act”

Deposit Outflow Scale: Up to $6 trillion, about one-third of total U.S. bank deposits

Legal Loopholes: Third parties can legally offer stablecoin yields, creating regulatory arbitrage

Lending Capacity Reduction: Deposit declines will force banks to cut loans to SMEs and homebuyers

Rising Borrowing Costs: Competition for deposits will push up overall financing costs in the economy

Trump Signed Executive Order Last Year to Reshape Regulatory Framework

Reviewing Trump’s policy layout for the crypto industry, last year he signed an executive order titled “Strengthening America’s Leadership in Digital Financial Technology,” which decisively reversed the previous administration’s regulatory direction. The core contents include three main aspects:

Establishing a federal-level cryptocurrency regulatory framework to ensure America’s leadership in the global industry. This changes the previous patchwork of inconsistent state regulations and lack of clear federal guidance. A unified regulatory framework will lower compliance costs and attract more companies to develop crypto businesses in the U.S.

Adopting an anti-government surveillance stance by explicitly banning the issuance of Central Bank Digital Currencies (CBDC), to prevent excessive government market intervention. This policy contrasts sharply with the Biden administration’s exploration of a digital dollar. Trump’s government believes CBDC could be used for citizen surveillance and privacy infringement, and thus firmly opposes it. This stance has garnered strong support from the crypto community and libertarians.

Establishing a cryptocurrency regulatory task force comprising Treasury Secretary, Commerce Secretary, and SEC Chair, among others, responsible for planning specific policy directions. The formation of this inter-agency task force indicates that crypto policy has been elevated to a national strategic level, no longer solely SEC’s regulatory matter.

Since taking office, the Trump administration has actively sought to reverse the Biden administration’s tough enforcement and regulation of the crypto industry by the SEC, leading to the most pro-crypto period in U.S. history. Trump dismissed SEC Chair Gary Gensler on his first day in office, appointed crypto-friendly Paul Atkins as his replacement, and instructed the SEC to withdraw or settle multiple lawsuits against companies like Ripple. This 180-degree policy shift is extremely rare in U.S. regulatory history.