Economist Nouriel Roubini warned Trump's cryptocurrency deregulation agenda threatens U.S. financial stability, calling the GENIUS Act a recipe for 19th-century banking chaos.
Bitcoin (BTC) has fallen nearly 50% from its October 2025 peak of $126,200 to around $64,000 while gold surged over 60% in 2025.
The economist who predicted the 2008 financial crisis published his critique on Project Syndicate Feb. 3, arguing crypto evangelists' promises of "$200,000 Bitcoin" and "digital gold" status collapsed alongside the market.
The cryptocurrency fell 6% in 2025 despite macroeconomic conditions that sent gold soaring, undermining claims Bitcoin hedges inflation or geopolitical risk.
GENIUS Act Creates Banking Instability
Roubini criticized the Guiding and Establishing National Innovation for US Stable Coins Act as recreating unstable "free banking" conditions from the 1800s.
The legislation allows stablecoins to operate without narrow bank regulation, lender-of-last-resort access or deposit insurance, making them vulnerable to runs.
The economist said allowing stablecoins to pay interest directly or through exchanges would destabilize fractional reserve banking by separating payments from credit creation.
He argued this demonstrates Trump's failure to understand the "semi-public good" banks provide through maturity transformation of deposits into loans.
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Failed Digital Gold Narrative
Roubini noted Bitcoin fell sharply every time gold spiked in response to trade wars or geopolitical tensions over the past year. The cryptocurrency traded below its November 2024 election levels despite Trump signing the GENIUS Act and pushing the Digital Asset Market Clarity Act.
The crypto market capitalization collapsed from $4.3 trillion to $2.3 trillion in four months, erasing over $2 trillion in value. Trump's TRUMP and MELANIA meme coins fell 95% from their peaks.
Roubini concluded the only widely adopted cryptocurrency application after 17 years remains stablecoins, which he described as digital versions of fiat money traditional banks already perfected.
He urged Treasury Secretary Scott Bessent to "teach Trump how the banking system works" before crypto industry influence leads to systemic collapse.
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