Crypto's real threat to banks

"First they ignore you, then they laugh at you, then they fight you, then you win."

- The Economist

That quote is often attributed to Mahatma Gandhi, though the Indian independence leader never said it. To the crypto industry, the apocryphal phrase is a popular mantra. Digital pioneers have endured snootiness, mockery and derision from Wall Street's elites. Now, they are mightier than ever.Bankers and digital-asset purveyors alike have had a bountiful year. The crypto industry has gained ground, largely owing to the legal certainty given to stablecoins by the GENIUS Act passed in July. Bank stocks have climbed by 35% since Donald Trump's election victory, on expectations of friendlier regulation. Even among bankers that find Mr Trump objectionable for other reasons, vanishingly few prefer the regulatory approach taken under Joe Biden.

Nonetheless, tension between the old and new is growing, and the threat from crypto is bigger than many bankers once believed. Even though lenders stand to benefit from deregulation, their once privileged position as the financial aristocracy of the Republican Party looks shakier than ever before. Sharing that role with crypto-industry upstarts poses a long-term threat.