Trump order may push undocumented immigrants to stablecoins, ATMs

President Donald Trump on May 19 signed an executive order directing federal regulators to strengthen fraud screening and consider limits on banking services for people without legal immigration status. The directive asks agencies including the Treasury to develop rules on customer identification, fraud prevention and risk mitigation for financial services provided to undocumented immigrants.

A White House fact sheet said gaps in identification practices have allowed militants, traffickers and money launderers to exploit U.S. financial institutions and evade law enforcement. The administration framed the directive as a national security measure and asked regulators to assess how banks and other firms verify customers and manage related risks.

The order specifically directs Treasury to issue guidance on peer-to-peer payment platforms and the use of such services to facilitate off-the-books wage payments. It also calls for a review of policies on extending credit and other banking services to people lacking legal immigration status.

The directive has renewed debate over so-called debanking, a dispute that arose earlier in the decade when some crypto firms reported losing banking relationships. Members of the Trump family have referenced banking pressure when forming a crypto business; Donald Trump Jr. said last year, “We got into crypto because-out of necessity-we were debanked.”

Policy and consumer advocates say limits on traditional banking could lead some undocumented immigrants to use stablecoins, crypto kiosks or informal remittance channels. Nic Carter, founding partner at Castle Island Ventures, warned that denying mainstream financial access can force people to rely on cash, shadow banks or other fringe infrastructure that may lack safety or consumer protections.

Nicholas Anthony, a research fellow at the Cato Institute, described the order as deputizing banks for immigration enforcement and predicted account closures and broader fear of the financial system among affected people. He added that some could turn to organized crime groups that operate established informal remittance networks.

Stablecoins, which are often pegged to the dollar, and crypto kiosks are among the tools available to people outside the regulated banking system. Bitcoin ATMs let users swap cash for cryptocurrency on the spot, but the largest U.S. operator, Bitcoin Depot, recently filed for Chapter 11 and shut down more than 9,000 kiosks.

Consumer advocates say crypto-based remittances lack protections required of licensed money transfer services, such as the ability to reverse payments within a short window. Tom Feltner, associate director of consumer policy at Americans for Financial Reform, said there is no uniform set of protections for stablecoins and crypto ATMs.

Dilip Ratha, a former World Bank economist who studies remittances, noted that converting digital assets into local currency remains difficult in many corridors, though stablecoins have seen use in places with unreliable banking such as Sudan and Nigeria. Ratha also said compliance rules have tightened since 2001 and questioned the number of undocumented immigrants who maintain bank accounts.

The executive order comes after federal banking agencies last month removed “reputation risk” as a supervisory tool. Critics point to the earlier Operation Chokepoint program, which targeted certain industries, as a historical precedent. Carter cautioned that expanding oversight over who can access the banking system could create a template future administrations might use.