A year ago, the most pro-crypto president in US history had just returned to power after pandering to clueless retail crypto investors and receiving massive financial backing from semi-corrupt crypto insiders. Donald Trump’s second coming was supposed to be a new dawn for crypto, leading various self-dealing evangelists to predict that Bitcoin would become “digital gold,” reaching at least US$200,000 by the end of 2025.
As promised, Trump did gut most crypto regulations. He also signed the Guiding and Establishing National Innovation for US Stable Coins (GENIUS) Act; pushed for the Digital Asset Market Clarity (CLARITY) Act; profited personally from shady domestic and foreign crypto deals; promoted his own useless meme coin; pardoned crypto crooks who had allegedly aided terrorist organisations; and hosted private dinners for crypto insiders at the White House.
Moreover, crypto was supposed to benefit from various macro and geopolitical risks, such as the ballooning of US and other advanced economies’ debt and deficits; the debasement of the dollar and other fiat currencies; new trade wars; and growing tensions between the US and Iran, China, and many others. Indeed, the heightened risk environment helps to explain why gold rose by over 60% in 2025.
But “digital gold” fell by 6% in 2025. As of this writing, Bitcoin is down 35% from its October peak, below where it was when Trump was elected, and the $TRUMP and $MELANIA meme coins are down 95%. Every time gold has spiked in response to trade or geopolitical ructions over the past year, Bitcoin has fallen sharply. Far from being a hedge, it is a way to leverage risk, showing a strong correlation with other risky assets like speculative stocks.
Calling Bitcoin or any other crypto vehicle a “currency” has always been bogus. It is neither a unit of account, a scalable means of payment, nor a stable store of value. Even though El Salvador made Bitcoin legal tender, it accounts for less than 5% of transactions for goods and services. Crypto is not even an asset, as it has no income stream, function, or industrial or real-world use (unlike gold and silver).
Seventeen years after Bitcoin’s launch, the one and only “killer app” in crypto is the stablecoin: a digital version of old-fashioned fiat money, which the financial and banking industry already digitalised decades ago. Yes, whether digital money and financial services should be on a blockchain (distributed ledger) or a traditional double-ledger platform remains a question. But 95% of “blockchain” monies and digital services are blockchain in name only. They are private rather than public, centralised rather than decentralised, permissioned rather than permissionless, and validated by a small group of trusted authenticators (as in traditional digital finance and banking) rather than by decentralised agents in jurisdictions with no rule of law.
True decentralised finance will never reach scale. No serious government – not even the Trump administration – will ever allow full anonymity of monetary and financial transactions, because that would be a boon for criminals, terrorists, rogue states, non-state actors, human traffickers, assorted crooks, and tax dodgers.
Moreover, because digital wallets and regulated exchanges must be subjected to standard anti-money laundering and know-your-customer (AML/KYC) rules, it is not even clear that transaction costs through permissioned and private “blockchains” are any lower – especially now that traditional financial ledgers have improved with real-time settlement and faster clearing tools. The future of money and payments will feature gradual evolution, not the revolution that crypto-grifters promised. Bitcoin and other cryptocurrencies’ latest plunge further underscores the highly volatile nature of this pseudo-asset class.
As for the GENIUS Act, having set the stage for another destructive experiment in free banking, like the one that ended in tears during the 19th century, it may well be remembered as the Reckless Idiot Act. Under the law, stablecoins are not regulated as narrow banks (meaning deposits and payments are separated from riskier lending and investing), nor do they have access to the lender-of-last-resort or deposit-insurance benefits provided by central banks.
Thus, all it would take to incite a panic and trigger a bank run is for a few bad apples in pseudo-libertarian US states to mis-invest their holdings or place their deposits in weak institutions like Silicon Valley Bank. As in the 19th century, the current US approach – thanks to Trump’s venality and cluelessness, and to the crypto industry’s corrupt influence peddling – is a recipe for financial and economic instability.
The recent fight between real banks and the crypto industry over the CLARITY Act is another example of Trump not understanding monetary and financial basics. The issue is not about banks wanting to keep their near-monopoly on monetary transactions. In a fractional reserve banking system, banks are involved in both payments and credit creation via the maturity transformation of short-term deposits into longer-term loans and credit. That means they provide a very valuable semi-public good.
Obviously, short-term deposits don’t pay interest because they are nearly equivalent to currency. Yet the crypto industry is pushing to allow interest payments for stablecoins – directly or indirectly via exchanges – which would undermine the foundations of the banking system that we all take for granted. So, we must either radically change our financial system to separate payments from credit creation (via narrow banks for payments and new loanable funds from financial institutions for credit), or prohibit stablecoins from paying interest and disintermediating banks.
This is a political and financial stability issue, and few are as serious or as sensitive. Jamie Dimon, Chairman and CEO of JPMorgan Chase, is rightly raising the alarm about the changes the crypto industry wants, and Brian Armstrong of Coinbase could not be more wrong in nonchalantly dismissing such concerns. If Trump has any advisers who are not corrupted by crypto cash, one hopes they can teach him how the banking system works before he allows his own personal interests to destroy its foundations. Treasury Secretary Scott Bessent, are you listening?
*Nouriel Roubini, Professor Emeritus of Economics at New York University’s Stern School of Business. Copyright: Project Syndicate, 2026, published here with permission.
22 Comments
Thus, all it would take to incite a panic and trigger a bank run is for a few bad apples in pseudo-libertarian US states to mis-invest their holdings or place their deposits in weak institutions like Silicon Valley Bank
SVB's issues were a structurally fragile fractional‑reserve banks plus politicized regulation, with crypto used as a scapegoat rather than being the root cause. SVB was targeted by the Biden admin to "take down crypto." Regulators “had it out” for tech‑forward and crypto‑adjacent banks while failing to police basic asset‑liability and liquidity risk at SVB. The SVB failure is an example of bad risk management in a fragile fractional‑reserve system, and as an indictment of both bank supervisors and the Fed.
Crypto is not even an asset, as it has no income stream, function, or industrial or real-world use (unlike gold and silver).
Tether Gold is a a gold‑backed stablecoin designed to track the spot price of gold rather than fiat currencies like USD. Each XAUt token represents ownership of one fine troy ounce of physical gold stored in Swiss vaults that meet LBMA Good Delivery standards.
So while it has no income stream or industrial use (in its digital form), it most definitely has function that can be used in the real world.
Roubini sounds like a broken record.
It has some level of function, but not in a way that's significantly better or cheaper than most incumbents. It's a solution lacking a problem.
Hence, it has little uptake by people desiring it's function, just people who are holding onto it, trying to convince others of it's function.
Nonsense. You do not decide what the functionality of XAUt is for its individual holders. XAUt is a tokenized gold rail: it lets Tether turn physical bullion on the balance sheet into a programmable asset that can back other products, generate fees, and diversify reserves.
All your arguments just sound like they're read from a marketing prospectus or spec sheet.
You do not decide what the functionality of XAUt is for its individual holders
At no point can you actually quantify how many users are using crypto due it it's functionality, at what volumes. The only growth story you can give is based on shifts of it's market value.
Compared to say, an emerging market like video streaming, where we can clearly work out continued number of paid subscribers, or hours of content watched.
Sometimes I wonder what you'd achieve if your unwavering faith in this was put towards something actually productive.
All your arguments just sound like they're read from a marketing prospectus or spec sheet.
As one of the first owners of Perth Mint Gold Token, I feel qualified to speak on digital gold.
At no point can you actually quantify how many users are using crypto due it it's functionality, at what volumes.
Of course you can. Different aggregators report “circulating” vs “total” numbers, as well as The Tether’s reserves/attestation. We already know Tether is one of the largest private/institutional owners of gold. It's even comparable to smaller gold-owning central banks.
Do your research.
As one of the first owners of Perth Mint Gold Token, I feel qualified to speak on digital gold.
If you bought a Toyota Corolla, does that mean you know how it's internal combustion engine works?
Of course you can. Different aggregators report “circulating” vs “total” numbers, as well as The Tether’s reserves/attestation. We already know Tether is one of the largest private/institutional owners of gold. It's even comparable to smaller gold-owning central banks.
None of that tells us what it's being used for.
Do your research.
What research did you do when you firmly attested that Tesla leads in robotics, self driving cars, and AI?
If you bought a Toyota Corolla, does that mean you know how it's internal combustion engine works?
Which is meaningless in the context of what I said. Because I knew that PMGT could be exchangeable for physical gold (much like PMGOLD), I understood far better about its value to me than people who had no idea what PMGT was and what it represented.
I'm not asking about it's value. Or market cap, or number of collectors. The context of the debate is the actual real life usage for something like Bitcoin or other crypto.
Defining it's function and evidencing it actually occuring are not the same thing. You owning some also doesn't answer that question.
I cannot transfer gold to bitcoin easily, but if I have a bitcoin i can move it to tether instantly, or pay for something anywhere in the world with BTC or tether 24/7. While you say not many people accept bitcoin, most do not accept gold either.
BTC per coin passed an ounce of gold way back USD about $1200 each in 2017, I will let you tell me which one has been a better store of value since 2017....
I like gold as well, but also see the instant ability to settle a debt any where in the world with crypto
Yet another answer that doesn't tell us how widespread crypto is being used for the proposed purpose.
I've used crypto. It'd barely count as a fraction of a percent of money I've sent or received during the same time. My guess is that the vast amount being held just sits there until it's bought or sold in chunks for someone else to sit on.
Using traditional currency in most countries these days is pretty cheap and easy. I can spend it many places almost instantly and with fairly minimal cost. The potential speed increase of crypto isn't worth the added process of converting it into another format.
Maybe if we were still in the days of writing checks and no ATMs or EFTPOS I'd be more easily sold on the functionality aspect.
Crypto is acting as a 24/7 settlement system, that does not care who you are, IMHO the BRICs do not need to invest a new settlement system, tether is doing it for them, and your gold never sits in China.
Folk...help me out here. I've been struggling since day one to understand how crypto works as a medium for trade. I sort of get all the 'free from control' and 24/7 arguments, but all I can see is people (or non-people) trading in crypto in the hope that the next trader is going to want it more so the price is gonna go up.
Value is always measured against traditional means of exchange, and cashed out on the same basis? So where is the benefit beyond speculation?
Does anyone legit actually use this medium to carry out a legitimate business? How many of you have actually bought and sold a physical asset using a blockchain-based system? The last legit transaction that made the news (well after the event) was the guy who forked out 10,000 bitcoins to buy a couple of pizzas? More recent transactions seem to be shrouded in criminality...or is that Fiat propaganda?
From my limited world view, surely the only reasonable indicator of crypto's value is the opportunity-cost of completing one transaction through a blockchain-based system vs. any other transactional medium.
For a luddite like me, Roubini's argument is sound.
I think it would make sense in Zimbabwe or DRC or Somalia or Argentina or Russia to buy Bitcoin as a store of value. Losing a third of the value of your savings over six months might be a better deal than losing all of your savings in a fortnight due to inflation, coups or mafia extortion. Having to be able to have a device that remembers your number that one of the local elite can't torture out of you would also be a consideration. If you have to flee to another country you probably have a better chance of accessing a bitcoin account than the bank account in your former country.
Living in New Zealand a dinosaur like myself can be reasonably sure that the money in my bank account will keep it's value until I can put it into a bit of land that will also keep it's value over time. The only thing I have to worry about is Labour getting back in and then I might have to learn some new crypto skills.
I think it would make sense in Zimbabwe or DRC or Somalia or Argentina or Russia to buy Bitcoin as a store of value.
Agree with this. We saw this with Turkey when the lira crashed and many bought bitcoin instead of USD as they perceived it to hold more value and possibly even grow by the time they accessed it again.
That's just highlighted the weakness also. The volatility means your money could drop by 30% in a month.
I believe 50% of Lebanon's economy runs off a USD black market. While the USD is becoming sketchier, it's still relatively stable, and more widely accepted.
" but all I can see is people (or non-people) trading in crypto in the hope that the next trader is going to want it more so the price is gonna go up."
That's it. That's all you need to know and understand about crypto. Every thing else is just smoke and mirrors to obfuscate the truth.
Agree 100%. Hopefully I can sell this worthless token to a bigger twit than me.
Future generations will look back at us and laugh in amazement that we exhausted so much energy for so little value.
Crypto investors aren't actually investors are they. They're gamblers, as Warren Buffet observed.
Blockchain tech has lots of use cases but bitcoin isn't one of them
Blockchain tech has lots of use cases but bitcoin isn't one of them
On the contrary. BTC is arguably the most successful use case of blockchain: it has achieved large‑scale, enduring product-market fit as a non‑sovereign monetary asset with global liquidity, decentralization, and security that no other blockchain use case has matched.
Blockchain was invented for Bitcoin, not vice versa.
The original blockchain design was created specifically to solve the double‑spend problem for a peer‑to‑peer electronic cash system (Bitcoin), rather than as a general‑purpose database.
The combination of proof‑of‑work, a fixed issuance schedule, and decentralized validation is tightly coupled to Bitcoin’s monetary use case, not to generic data applications
'Blockchain was invented for Bitcoin, not vice versa.'
Fair point. What I was trying to say was the distributed ledger as implemented by blockchain tech can support other applications that don't require coin minting or proof of work and enormous energy burn.
There's no denying blockchain tech is innovative and it solves the problem of paying people you don't trust and who don't trust you and enables those payments to be made globally without any governmental oversight.
But most people who 'invest' in Bitcoin aren't using it to make payments. They're simply gambling that they can sell again at a profit.
The hype would have you believe that bitcoin is a 'store of value', 'digital gold', or a hedge against inflation and other market risks. The current price meltdown pretty well disproves that
...and tax dodgers.
Crypto served as a tax avoidance vehicle.
The EU DAC8 reclassified it (Jan 2026) and closed the loophole.
This has dampened crypto enthusiasm.
Tax obligations depend on jurisdiction. DAC8 is about reporting and information exchange, not about imposing a uniform tax or forcing every EU country to tax Bitcoin.
It all looks like a profitable collective hallucination for the very few, but you just know for the many they're going to wind up looking at themselves in that cheap motel's harsh-lit mirror at 3am, as they realise that this is rock bottom, that their life has not worked out as they imagined, and they have to go cold turkey.
A shame, as the underlying blockchain technology is useful.
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