In the lead up to the 2024 presidential elections in the US, Donald Trump aggressively promoted cryptocurrencies. After assuming power in January 2025, he has kept up the momentum on cryptos. His family-linked World Liberty Financial has launched a stablecoin called USD1 which “is backed by dollars and U.S. treasuries that have the full faith and credit of the U.S. government.”
President Trump’s crypto machinations have been linked with questionable dealings with entities across the world, including Pakistan. More recently, Trump has been playing a crucial role in enshrining stablecoin regulations into US law.
On the other side of the aisle, traditional financial intermediaries like Mastercard, Visa and SWIFT have been grappling with the crypto challenge. Total transfer volume through stablecoins surpassed the combined value of Mastercard and Visa transactions in 2024. The response of traditional institutions has been to increasingly co-opt and embrace cryptocurrencies and the technology behind them — blockchain.
For instance, in 2024, Mastercard reportedly tokenised 30 per cent transactions. SWIFT, which facilitates cross-border transactions using a messaging protocol, is experimenting with tokenised assets and digital currencies.
What were for more than a decade disparate worlds are headed towards more convergence. Blockchain-based currency solutions are poised to move towards more intermediation while the heavily centralised offerings would move towards more disintermediation.
Explaining the two financial worlds
When cryptocurrencies, starting with Bitcoin, became popular in the 2010s, they challenged the very basis of the global financial architecture — heavy centralisation. Between central banks (regulators), commercial banks, payment platforms and card networks, the whole financial system was tightly knit for decades, if not centuries. And there was a good reason for this. Flow of money is key to all economic activities, whether in a neighbourhood, a city or between states. But how would consumers in so many economies know the differing values of so many currencies? More importantly, how would they trust a piece of paper as representing some value?
The complex yet functioning global financial architecture solved these problems: on one hand it established a way to ascertain relative values of currencies, while on other the centralised entities brokered trust. Strengthening and harmonising record-keeping — which is as important to the idea of money as the creation of money itself — led to furthering of trust in the global financial architecture.
But the system is not perfect. Sometimes there is excessive inflation. Sometimes there are financial crises with global ripple effects. But at all times there are a host of charges that have to be paid to move money across economies. Global payment intermediaries, from SWIFT, Mastercard to Visa, levy charges for transactions. That this archaic system remains in place decades into thorough digitalisation of all aspects of our economies only aggravates grievances of consumers.
It is then understandable that many would find the idea of decentralised finance which eliminates or reduces transaction costs quite appealing. But in absence of a centralised system, how would trust be established?
That’s where cryptocurrencies come in. They solve for trust through mathematics (think of all the cryptography involved). Cryptocurrencies are based on blockchain technology. Blockchain, in simple terms, is a distributed public ledger that records transactions in blocks. These blocks are connected in a chronological order. Transactions on a blockchain are transparent and can be verified by anyone. The blockchain is also supposed to be immutable.
But because cryptocurrencies like the Bitcoin are not backed by any underlying asset, they are prone to extreme fluctuations. Stablecoins are a particular type of cryptocurrencies that emerged as a solution to the volatility problem. As their name indicates, they aim for price stability by pegging themselves to an underlying asset, such as the US dollar. In essence, stablecoins tend to mimic some of the traditional currencies that have a heavy presence of intermediaries. The stablecoin issuers themselves become consequential intermediaries. Bitcoin and other decentralised cryptocurrencies, on the other hand, prefer disintermediation even if at the cost of volatility.
Convergence of the two worlds
When the hegemony of centralised institutions in the global financial architecture is being challenged, one would expect the biggest beneficiary of the system to defeat the challenger in order to preserve the status-quo. But Trump has other plans.
As discussed above, he has been actively pushing for a greater role of stablecoins in the financial system. Mastercard, Visa and SWIFT, on the other hand, are increasingly embracing crypto and blockchain in an attempt to co-opt their challenger. Based on these developments, it can be inferred that going forward, the global financial landscape would see two movements in the intermediation-disintermediation spectrum.
Blockchain-based currency solutions would move towards more intermediation while the heavily centralised offerings would move towards more disintermediation. It is reasonable to expect more USD1 type stablecoins, and more Blockchain integrations by traditional financial institutions such as Mastercard, Visa, SWIFT and even central banks. This convergence between the two disparate worlds is poised to remake the global financial system.
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