Crypto’s Grip on Washington: Wall Street Pushed to the Sidelines

The crypto industry’s triumph at the heart of power

Wall Street is no longer setting the agenda at the center of U.S. financial policy. Instead, the crypto sector, driven by zeal and multi-billion-dollar campaign contributions, has taken the spotlight, forcing the traditional banking world into the background. With Donald Trump’s return to the White House and a Republican Congress behind him, the industry has achieved a string of political victories, most recently with the passage of the controversial GENIUS Act.

This law legitimizes the use of so-called stablecoins—digital currencies pegged to the dollar—and allows crypto firms to issue them under conditions that have especially alarmed smaller banks. According to Christopher Williston of the Independent Bankers Association of Texas, the law is a direct attack on the business model of community lenders. “It feels like yet another attempt to replace us,” he says.

The banking sector steps out of the shadows

Where the banks once remained largely reserved, they have now gone on the offensive. Organizations such as the American Bankers Association and the Bank Policy Institute are pushing to amend the law, which they say could lead to a massive deposit exodus and undermine financial stability. Their goals include preventing crypto firms from offering yield on stablecoins and stopping attempts to obtain national bank status without subjecting themselves to the same regulations as traditional banks.

“America’s financial system is built on trust,” says Paige Pidano Paridon from BPI. “When consumers can’t tell what’s safe and what isn’t, the entire system suffers.”

Tokenization and the battle for the stock market

But the crypto lobby’s strategies don’t end with stablecoins. Behind the scenes, they are also pushing for the tokenization of stocks—that is, converting shares into blockchain-based tokens. Proponents promise faster and cheaper global trades, but giants such as Citadel and SIFMA warn that it could unleash chaos if tokenized stocks are not subject to the same regulation as traditional securities.

Congressman Warren Davidson calls it a turf war that has blocked clear regulation for years. Now, the crypto sector is frequently at the top of GOP lawmakers’ priorities, and Wall Street is seeing its former dominance slip away.

Data, dominance, and the next battle

The conflict is about more than just money and technology—data is at the center too. The crypto sector and fintech players have just persuaded the Consumer Financial Protection Bureau to reconsider an open-banking rule that would have barred banks from charging for customer data access. For crypto companies, such data is essential to deliver user-friendly services.

After intense lobbying, the CFPB has now postponed its decision and reopened the case—a development with major consequences for both banks and tech firms.

A legacy in the making

Even in a world where banks still have meetings at the White House, it’s clear that crypto’s grip on Washington has become a force no one can ignore. “There are other aspects banks have long benefited from,” Davidson notes, “but this is also about grappling with a new reality.”

Banks have lost their monopoly. The crypto sector’s legacy is being forged in these months—and Washington’s doors are already open.

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