Trump's Crypto Rejection: A Catalyst for Global CBDC Adoption?
3min read The U.S. government’s outright rejection of a central bank digital currency (CBDC) under President Donald Trump has paradoxically accelerated global adoption of such digital currencies, according to analysis by Mike Peacock, former head of communications at the Bank of England. While Trump’s January 2024 executive order banning federal CBDC development framed such currencies as threats to privacy and sovereignty, it has inadvertently created a geopolitical vacuum that other nations are rushing to fill. This article explores how Trump’s policies—coupled with rising economic nationalism—are fueling a global CBDC arms race, with profound implications for investors.
Ask Aime: What do we need to know about the current state of the CBDC market and how do we predict its future?
The Unintended Consequences of Trump’s Stance
Trump’s executive order explicitly prohibited U.S. agencies from developing a CBDC, citing concerns over government overreach and privacy. However, this decision has backfired in one critical way: it has galvanized other major economies to fast-track their own CBDC projects. By 2025, countries like China, the Eurozone, and emerging markets are poised to lead in this arena, leveraging CBDCs as tools for financial sovereignty and global influence.
Ask Aime: How does Trump's CBDC ban impact global digital currency adoption?
Peacock argues that the U.S. rejection of a CBDC has made such currencies a “strategic necessity” for other nations. “The irony is profound,” he writes. “Trump’s policies, aimed at preserving dollar dominance, have instead accelerated the erosion of that dominance by leaving the door wide open for rivals.”
China’s Digital Yuan Surge
China’s digital yuan, or e-yuan, exemplifies this trend. Transactions using the CBDC have tripled since mid-2023, reaching 1.2 trillion yuan ($170 billion) by mid-2024. Beijing has positioned the e-yuan as a cornerstone of its financial technology strategy, aiming to reduce reliance on the U.S. dollar in cross-border trade. The currency’s adoption is being accelerated through partnerships with emerging markets like Saudi Arabia and Egypt, which see it as a hedge against U.S. sanctions.
The Eurozone’s Digital Euro Gambit
The European Central Bank (ECB) has framed its digital euro project as a matter of survival. With U.S. tech platforms handling two-thirds of euro-denominated retail payments, the ecb fears losing control over its monetary system. ECB Chief Economist Philip Lane recently stated, “A digital euro isn’t just about innovation—it’s about retaining independence in an era of fragmented trade.”
The ECB’s timeline for launching the digital euro has been advanced to 2026, with pilot programs already underway in Germany and France.
The Rise of Multipolar Financial Systems
Trump’s economic nationalism—such as threats to impose 100% tariffs on BRICS nations exploring CBDC-based payment systems—has further incentivized alternatives to dollar dominance. The mBridge project, a collaboration between China, Hong Kong, Thailand, and the UAE, aims to create a CBDC-based cross-border payments network. By 2025, such systems could handle 20% of global trade transactions, sidelining SWIFT’s dollar-centric model.
Risks for the U.S. Economy
The U.S. faces significant vulnerabilities. With federal debt exceeding 120% of GDP and the dollar comprising 60% of global forex reserves, any erosion of its reserve status could trigger instability. The Bank for International Settlements (BIS) warns that interoperable CBDCs could reduce cross-border payment costs by 50%, further marginalizing the dollar.
Investment Implications
Investors should monitor two key trends:
1. CBDC Infrastructure Stocks: Firms like Mastercard, Visa, and SWIFT are investing in CBDC interoperability solutions.
2. Emerging Market Currencies: Countries like Saudi Arabia and Indonesia, which are early adopters of CBDCs, may see currency appreciation as trade flows shift.
Conclusion: A New Monetary Order
By 2025, the global financial landscape will be unrecognizable. The U.S.’s refusal to adopt a CBDC has handed the initiative to rivals, with China and the Eurozone leading the charge. While Trump’s policies aim to protect U.S. dominance, the data paints a different picture: the dollar’s share of global reserves has already fallen from 65% in 2019 to 60% in 2024, and this decline will likely accelerate.
Investors ignoring CBDC adoption trends risk missing out on the next wave of financial innovation. As Peacock concludes, “The age of the dollar’s unchecked supremacy is over. The question now is: Who will fill the void?”
The answer, it seems, is written in code—and it’s being developed everywhere but the U.S.
