How Cryptocurrency Could Be Coming for Your Bank Account

I’ve always thought of crypto as an unlikely addition to mainstream finance, like mustard on spaghetti. That’s because the financial world has been positively withering toward crypto. Jamie Dimon, chief executive of JPMorgan Chase, promised in 2017 to fire any trader who dabbled in Bitcoin, and other major banks took a similarly dim view.

So I perked up over the past few weeks when some of the biggest names in banking suddenly began to compliment crypto. I initially assumed they were just genuflecting to Washington: The Trump family loves crypto; the president has made about $7 billion from a coin that bears his name; his sons run a crypto company.

But my reporting shows something more complicated. Wall Street’s crypto plans aren’t just about politics. They offer a new way to profit — one in which banks can make more money by exposing their clients to more risk while facing less oversight. Some changes may threaten the very backbone of the banking system: your personal checking account.

Crypto crash course

Cryptocurrencies are digital money not issued by any particular government. Unlike paper currencies, whose value can be at least partly controlled by central bank interventions (think: printing more money), the price of crypto is set by supply and demand. Usually, the more people who want it, the more the price goes up, and vice versa.

That might be ideal for speculators who want to bet on crypto price swings, but it’s a huge drag for anyone who wants to use cryptocurrency to buy stuff. It creates uncertainty about whether a transaction today will cost the same tomorrow.

As a result, more people have turned in recent years to a form of cryptocurrency called a stablecoin. Unlike Bitcoin, stablecoins have a fixed value and a price that doesn’t swing up or down. Those being developed now are pegged to the U.S. dollar.

What is happening?

Now the biggest banks in the country — Chase, Bank of America and Citi, among them — are planning to launch their own stablecoins. Retailers like Amazon and Walmart are also studying coins of their own.

This is all newly permissible under the GENIUS Act, a bipartisan law passed this summer with encouragement from the banks. The law is significant for a couple of reasons:

• Eliminating cash: It created a way for banks to offer customers stablecoins instead of handing back their money in cash. The stablecoins have to be exchangeable for U.S. dollars.

• Keeping the interest: Unlike the interest accrued in your checking and savings accounts, the law tells banks to keep the interest earned on stablecoins. If you have $25,000 in a high-yield savings account that pays 4 percent annually, you amass $1,000 every year. You’d forego that with stablecoins.

Your accounts

Bank executives told me they foresaw a not-too-distant future in which banks direct people with checking accounts to exchange their money for stablecoins. You could then use those stablecoins to buy things instead of using cash or credit cards.

Banks’ stablecoins could be available as early as next year.

The benefits? For you, this could potentially mean low fees and fast speeds for tricky transactions like overseas transfers.

The drawbacks? Beyond losing interest on accounts, you would also forgo the federal insurance that pays back depositors in the event of a bank failure. That’s because the regulators treat stablecoin accounts as “investments,” not ordinary deposits. In short, your accounts would have fewer protections than they do now.

Almost every banker I spoke to brought up a historical parallel: The so-called Wildcat banking era of the 1800s, in which small state banks issued competing currencies with little oversight from Washington. Mini financial crises ensued as tiny currencies crashed — and the federal government had to intervene.

Read more here about why banks now love crypto.

ALASKAN DESTINY

Former Gov. Sarah Palin famously said she could “see Russia” from Alaska. “Saturday Night Live” mocked her, but Palin wasn’t wrong: Russia and Alaska are only 2.4 miles apart. You could walk that far in less than an hour. Maybe that’s why Trump and Vladimir Putin chose the state for their confab tomorrow.

Alaska has often figured into relations between Washington and Moscow. In 1867, the U.S. bought the land from Russia for the equivalent of $160 million in today’s dollars. After World War II, Americans made it a state, constructed bases and used the last frontier to surveil its Cold War rival. Even today, many Native Alaskans have Russian surnames.

Now Alaska may help write the next chapter in Russian-American affairs. Trump will press Putin for peace in Ukraine. Putin will try to keep as much Ukrainian territory as he can. But anything can happen when these two meet, as reporters remember from Trump’s first term. Peter Baker, our chief White House correspondent, breaks down their relationship, and the relationship between their countries. Read his piece here.

More on Russia and Ukraine

• European leaders said they had worked out a strategy with Trump for his meeting with Putin: Any peace plan must start with a cease-fire and include Ukraine.

• For the past week, a worried Volodymyr Zelensky has rallied allies and scrambled to avoid being sidelined.

• Russia’s military was once on the brink of collapse in Ukraine. Now, Putin thinks he has the upper hand.

• Russia wants all of the eastern Ukrainian region known as the Donbas. For military and political reasons, Ukraine would find that extremely difficult.

• As Russian forces push forward in Ukraine, residents are evacuating in vans or on battered bicycles in wilting heat. See photos here.

THE LATEST NEWS

Trump Administration

• Trump has made himself the chip industry’s leading decision maker by restricting billions in sales, slapping fees on exports and even briefly demanding a C.E.O.’s firing.

• Trump’s unveiling of this year’s Kennedy Center honorees highlighted that he is at heart a pop culture obsessive, Shawn McCreesh writes.

• The U.S. government’s ethics watchdog said that the Treasury secretary, Scott Bessent, hadn’t fully complied with an agreement to divest his financial assets.

• Trump wants to “take back” Washington, but the federal government already controls much of the city. (The Morning’s most-clicked story yesterday was about the National Guard’s deployment there.)

• In its campaign against “woke” science, the N.I.H. has ended research on the gaps between racial and socioeconomic groups.

• Food companies are tweaking their products and ads to appeal to the Make America Healthy Again movement.

Middle East

• Israel is believed to be holding at least 200 Palestinians suspected of involvement in the Oct. 7 attack. None have been charged or put on trial.

• Extremist Israeli settlers are carrying out one of the most violent campaigns against Palestinian villages in the West Bank since the U.N. began keeping records.

• Israel’s chief military commander has cast doubt on Benjamin Netanyahu’s plan to capture Gaza City, officials say. One minister suggested the general could be fired.

• Starvation has spread in Gaza as the prices of basic goods have skyrocketed. Click the video below to watch Ashley Wu, a reporter who works with data, explain how costs have risen, at times around 7,000 percent.

Britain

• During a family vacation in Britain, Vice President JD Vance met Nigel Farage, a right-wing populist whose party is leading in British opinion polls.

• Vance and Britain’s foreign secretary also went carp fishing without a license, which caused a very British scandal. Read about it in The Guardian.

Other Big Stories

• Sudan, which is engulfed in civil war, is experiencing its worst cholera outbreak in years, a medical charity said.

• Companies are pouring money into artificial intelligence in the hope of improving workers’ efficiency. It has yet to pay off.

• Americans are drinking less alcohol than ever, a new poll finds.

IN ONE CHART

In 2000, Chinese applicants filed just 18 clean energy patents that analysts said were internationally competitive. In 2022, they filed more than 5,000, leading the world in clean energy innovations.

How did China race so far ahead? Beijing decided clean energy was a priority, and it spent lavishly on academic research. “The sheer volume of Chinese investment has been so much larger than in the West,” an analyst said. Read about how China became a clean-tech juggernaut.

Indians eat an array of street food, but the king — and one of India’s most famous culinary exports — is the samosa. This deep-fried, plump, potato-filled snack is usually served with tangy and sweet condiments and can cost as little as 15 cents.

When a government advisory recently put the samosa on a list of things that should be eaten in moderation, social media erupted with memes, and the Indian media treated the list as an attack. Read about the uproar.

More on culture

• Trending: Taylor Swift appeared on her boyfriend Travis Kelce’s podcast, where she revealed that her album, “Life of a Showgirl,” will be released Oct. 3. Read more takeaways.

• Beyoncé won her first Emmy for “Beyoncé Bowl,” her N.F.L. halftime show that streamed live on Netflix on Christmas Day.

• Meat is back at Eleven Madison Park, the acclaimed Manhattan restaurant that once made headlines for its switch to a climate-minded vegan menu.

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