Old-school banks failing is a much bigger threat to the crypto market than crypto is to the regular banking system.
April 2, 2026
Original Paper
Crosstagion: The GENIUS Act, CLARITY, and the OCC-CFTC-SEC Gap in Bidirectional Stablecoin Contagion
SSRN · 6421898
The Takeaway
While regulators focus on protecting banks from 'risky' crypto, the 2023 banking crisis showed that the contagion flows more heavily the other way. When traditional banks fail, they destabilize the reserves of stablecoins, triggering market-wide cascades that current laws are not designed to handle.
From the abstract
The GENIUS Act's prudential framework protects against systemic risk that flows in one direction: from stablecoin failure into traditional banking risk. The empirical record of crosstagion, the bidirectional contagion between traditional finance and decentralized finance, demonstrates that the transmission channel runs the other way as well. When traditional financial stress destabilizes payment stablecoin reserves, as occurred when Silicon Valley Bank's failure briefly unpegged USD Coin in Marc