Donald Trump will bail out crypto holders in 2026
By Liam Proud When fraudulent cryptocurrency exchange FTX collapsed in 2022, unleashing turmoil in digital-asset markets, no one in the White House thought it was their problem. The administration of President Joe Biden viewed bitcoin and other blockchain-based assets with suspicion, while watchdogs studiously maintained a firewall between the volatile crypto business and mainstream financial institutions.The setup couldn’t be more different heading into 2026. Donald Trump and his family are with crypto. A loss of confidence in a major stablecoin could impair the U.S. Treasury market. If another FTX-style meltdown happens in the coming year, expect the current occupant of the Oval Office to step in.Crypto proponents already have a lot to thank Trump for. The total value of digital tokens including bitcoin, ether and the like surged by $1.2 trillion in the 12 months following his 2024 election victory, according to CoinGecko data. The administration has championed the sector, and prioritised legislation that gave a sound legal footing to dollar-backed assets known as stablecoins. Reuters in October that the wider Trump Organization generated $802 million of income in the first half of 2025 from its crypto ventures. If the recent selloff in bitcoin and other cryptocurrencies gathers pace, the commander-in-chief and his clan have strong motivations to help out.There’s no shortage of triggers that could precipitate a bailout. The most dramatic would involve a run on a stablecoin like Tether’s USDT, which had about $180 billion of tokens in late November. The dollar-pegged coin is backed by assets like short-term American government debt and is redeemable for greenbacks. Whether that would be true in a total meltdown is an open question, however. According to its September reserve report, the company that issues the tokens had an equity buffer of about $7 billion. The implication is that if its assets lost 4% of their value customers’ dollar-denominated tokens would no longer be fully supported by dollar reserves, unless the parent company stepped in to help out.That margin of safety might not suffice in a full-on crisis. Consider what happened to Circle Internet’s USDC in 2023, when Silicon Valley Bank failed while holding 8% of the stablecoin’s reserves as deposits. The token traded below a dollar on secondary markets – a situation known as “breaking the buck”. By comparison, some of Tether’s reserves seem conspicuously volatile. Bitcoin accounted for 5% of the assets backing USDT as of September, while precious metals comprised another 7%.If loss-fearing investors fled Tether, prompting it to lose its peg, large parts of the crypto market would suffer. Dollar-crypto pair trades are commonly quoted in USDT, meaning the market could freeze up. Moreover, a run could force the stablecoin issuer to dump large quantities of Treasuries, creating problems for the world’s key financial asset. Even without Trump’s pro-crypto leanings, that would capture the White House’s attention. Tether also has close ties to Cantor Fitzgerald, the Wall Street brokerage formerly owned by Commerce Secretary Howard Lutnick and now managed by his son.Another possibility is that a cryptocurrency exchange fails. The European Systemic Risk Board (ESRB) pointed out in a recent report that major groups like Binance, OKX and Bybit differ from conventional securities exchanges because some also offer services like custody, financing and investment or “yield” programs. In some cases, the groups or their owners also have trading businesses. Regulators do not allow this model in mainstream finance because of conflicts of interest and risks of contagion. A seismic hack, trading hit or loan loss, for example, could impair an exchange and affect its ability to offer other vital market services. The failure of one of these behemoths could have “dire, if not catastrophic, implications” for crypto, the ESRB concluded. The industry’s concentration further raises the stakes: CoinGecko data shows that Binance, MEXC, Gate, Bitget and Bybit collectively handled 71% of spot crypto trading volumes in July among centralised exchanges.How a bailout would work depends on what goes wrong. A Tether liquidity problem would resemble a bank run. It might therefore seem logical to do what Treasury Secretary Janet Yellen and the Federal Reserve did during the 2023 regional banking crisis: offer to lend against good assets to ease the panic. That program was backstopped by Treasury’s Exchange Stabilization Fund, a pot of money that doesn’t need Congressional approval. Trump’s administration recently used it to provide financial assistance to Argentina.If the White House wanted to stop a failed exchange from causing a cascade of losses, it could repurpose the Strategic Bitcoin Reserve or Digital Asset Stockpile to put a floor under markets. Those vehicles were set up in early 2025 to consolidate the government’s disparate holdings of crypto tokens, which White House adviser David Sacks said may include 200,000 bitcoins – worth $18 billion at late-November prices. The vehicles are supposed to be budget neutral. Yet Trump could conceivably scrap that requirement in a crisis, or even sell other government assets like gold to buy bitcoin and other troubled digital assets. Another impetus to act may come from the fact that mainstream banks are now allowed to dabble in the volatile sector: the U.S. Office of the Comptroller of the Currency said in March that lenders can conduct some crypto-related business, including offering custody and some stablecoin-linked activities. It opens up the possibility of a digital-asset meltdown infecting traditional finance.The political case for stepping in is strong. About one in seven U.S. adults owned crypto in July, a Gallup survey found. Advocacy group Public Citizen calculated in August 2024 that crypto firms were the dominant political spenders up to that point in the election cycle, accounting for 44% of all corporate contributions. Trump’s moves helped create the 2025 crypto boom, meaning the public could blame him for a collapse. With crucial mid-term elections looming, he would find it hard to shrug off a digital-asset panic. The potential threat to his family’s wealth offers further motivation.Bitcoin’s founder seems to have been motivated in large part by anger about the bank bailouts sparked by the 2008 financial crisis. Almost two decades later, the movement that started as a protest against “Too Big to Fail” is ready to join the club.Follow Liam Proud on Bluesky and LinkedIn.This is a Reuters Breakingviews prediction for 2026.