Key Takeaways:
The same debanking pressure that drove the Trump family into crypto now threatens to push millions of undocumented immigrants out of the traditional banking system — and into stablecoins, Bitcoin ATMs, and peer-to-peer payment platforms.
President Donald Trump on May 19 signed an executive order "to restore integrity to America's financial system," directing the Treasury Department and federal banking regulators to tighten fraud screening and customer identification rules for undocumented immigrants seeking financial services. The White House said in a fact sheet that "gaps in customer identification practices have allowed terrorists, drug traffickers, money launderers, and other criminal networks to exploit U.S. financial institutions."
The order creates a policy irony that even critics acknowledge. Eric Trump and Donald Trump Jr. have publicly cited bank pressure as the reason their family launched World Liberty Financial in 2024. "We got into crypto because — out of necessity — we were debanked," Trump Jr. said at a conference last year. Now the administration is applying similar pressure to a population that policy experts say has few alternatives.
Nicholas Anthony, a research fellow at the Cato Institute, told Decrypt the executive order is effectively "deputizing banks as immigration enforcement officers." He warned that many undocumented immigrants will view the banking system "with fear or hostility" and turn to alternatives as "an escape hatch." Some will use crypto, he said, while others may turn to organized crime groups such as cartels for remittances, because those networks are deeply rooted and widely known.
Stablecoins and the shadow banking system
The executive order specifically directs the Treasury to craft guidance on "peer-to-peer payments platforms to facilitate 'off-the-books' wage payments," a provision that could sweep in stablecoin transactions. Stablecoins pegged to the U.S. dollar have seen notable adoption in corridors where banking access is unreliable, including Sudan and Nigeria, according to Dilip Ratha, a former World Bank economist who has studied remittances for decades.
Tom Feltner, associate director of consumer policy at Americans for Financial Reform, said stablecoins and Bitcoin ATMs lack the consumer safeguards required of remittance providers under federal law, including the ability to reverse payments within 30 minutes. "There's no uniform set of protections," he said. "This is exactly the kind of shadow banking system that we've designed remittances to stay out of."
Bitcoin Depot, one of the largest Bitcoin ATM operators, filed for Chapter 11 bankruptcy earlier this month and pulled the plug on 9,000 kiosks across the U.S., underscoring the fragility of the infrastructure that could serve as a lifeline for the unbanked.
A dangerous blueprint
Nic Carter, founding partner at Castle Island Ventures who popularized the term "Operation Chokepoint 2.0" to describe alleged Biden-era pressure on banks to cut ties with crypto firms, said he opposes the new policy even though the circumstances differ. "It's pretty cruel to deprive someone of access to financial infrastructure entirely, or force them to utilize cash, shadow banks, or fringe infrastructure, which might not be safe or credible," he said.
Carter warned that expanding government oversight of banking access establishes a dangerous precedent. "Trump is going after illegal immigrants today, but what happens in a Democratic administration?" he said. The executive order comes as banking regulators have begun to reverse course on other fronts — last month, the Office of the Comptroller of the Currency eliminated reputation risk as a supervisory tool, a change the crypto industry had long sought.
The number of undocumented immigrants with bank accounts is likely small, Ratha said. "Do you really want to waste so much resources going after a few people?" he asked. But the policy shift could accelerate a broader migration away from traditional finance, with crypto positioned as the primary alternative — whether or not the industry is ready for the influx.
This article is for informational purposes only and does not constitute investment advice.
