Trump’s 10% Credit Card Cap Proposal Exposes Traditional Finance’s Flaws—Crypto’s Decentralized Alternative Shines

Another day, another political band-aid for a systemic financial wound.

Trump's proposed one-year 10% interest rate cap on credit cards—touted as relief for affordability—instead highlights the fragile, permissioned nature of traditional debt markets. It's a temporary fix for a permanent problem: centralized control over your capital.

Where Traditional Finance Fumbles, Crypto Builds

While politicians debate rate ceilings, decentralized finance (DeFi) protocols operate 24/7 with transparent, algorithmically-set rates. No waiting for legislative sessions. No arbitrary caps that distort risk pricing and vanish after twelve months. Need liquidity? Over-collateralized crypto loans bypass credit checks entirely, offering access based on asset ownership, not FICO scores.

The Real Rate Revolution Isn't in Washington

The 10% figure makes headlines, but it's a distraction. The real innovation in rate setting happens on-chain, where supply, demand, and smart contracts—not election cycles—determine the cost of capital. This proposal underscores a core vulnerability: your financial access shouldn't hinge on a politician's promise or a bank's benevolence.

Sound money doesn't need annual renewals. It needs immutable rules.

So here's the cynical finance jab: Maybe the most predictable thing about traditional finance is its need for constant government intervention to mask its inherent inefficiencies. Meanwhile, the code just keeps running.

Banks warn the cap would cut lending and hit growth

Citigroup finance chief Mark Mason said the cap would cause “a restriction on providing credit in the market to those who need it most because of the economic impact to the business model of this industry.” Mark added it would bring “unintended consequences on the consumer” and likely lead to a “significant slowdown on the economy.”

Wells Fargo finance chief Mike Santomassimo said the damage would be broad. He warned there would be “significant negative impact of credit availability for a wide spectrum of people” and said economic growth would take a hit if the cap became law.

Trump defended the idea on Truth Social, saying Americans should not be “ripped off” by card companies charging 20% to 30%. His rate cap came alongside other cost plans, including a $200bn government purchase of mortgage‑backed securities to push down mortgage rates and a proposal to bar institutional investors from buying single‑family homes. Wall Street saw the package as aggressive and rushed.

Politics, profits, and pushback collide against Trump’s plans

Trump raised the cap idea during the 2024 campaign, but his first year in office focused on easing bank capital rules and weakening the Consumer Financial Protection Bureau.

Aaron Klein of the Brookings Institution said TRUMP was tossing out ideas that sound like Bernie Sanders, who backed a similar cap last year with support from Elizabeth Warren. That bill stalled in Congress.

Shares in Capital One, American Express, and Citigroup fell after the news. JPMorgan finance chief Jeremy Barnum said “everything’s on the table,” including a possible legal fight, and called the proposal weakly supported and not justified. Wall Street took that as a sign the industry is ready to dig in.

Klein said a 10% cap would shrink credit access, push borrowers toward lightly regulated lenders, and hurt small businesses that often rely on cards and home equity early on. Others pushed back.

Shearer said his research shows profits would drop, but lending would not collapse. He said banks earn excess profits and could offset losses by trimming rewards. A New York Fed study found card lending earns a 6.8% return on assets, over four times the broader banking average.

Support also came from Klarna chief Sebastian Siemiatkowski. He said similar caps exist in Portugal, the Netherlands, and France, ranging from 12% to 24%, without breaking markets. He said the system is broken, and some borrowing rates do not end well.

Policy experts said Trump cannot impose the cap alone. It needs legislation. While some bipartisan interest exists, resistance inside Trump’s party is strong. House Speaker Mike Johnson called it complicated and said building consensus would take work.

Wall Street sees the effort as another way for the WHITE House to lean on monetary policy during a standoff with the Fed.

Jai Kedia of the Cato Institute said Trump knows high borrowing costs will shape the election, which is why he is trying to cut the price of money. Wall Street is now bracing for what comes next.

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