Trump's Crypto Reversal
An Albatross Around Our Collective Necks
In his recent televised speech touting his economic accomplishments, Donald J. Trump did not mention cryptocurrency or his efforts to enhance acceptance of digital currencies in the financial world, even though his support in his second term as president has been crucial to the future of crypto. It may yet prove to be an albatross around our collective necks.
What is a “cryptocurrency”?
Kaspersky, the cybersecurity company, defines cryptocurrency thusly:
Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions.
The use of encryption to verify transactions is responsible for the name. Encryption is also designed to provide safety and security. It can also allow tax avoidance and other forms of illegal activity to escape notice.
Bitcoin, founded in 2009, was the first cryptocurrency. It has since been joined by a number of others, including Ethereum, Litecoin and Ripple. There are over 500 exchanges now on which one can buy shares of a cryptocurrency.
During his first term in the presidency, Trump did not view cryptocurrency favorably. According to Forbes, he claimed Bitcoin and other cryptocurrencies were “based on thin air” and enabled criminal activity. As late as 2021, Trump declared on Fox Business, “Bitcoin, it just seems like a scam. I don’t like it because it’s another currency competing against the dollar.”
The transformation of Trump’s opinion came during his campaign for re-election. According to OpenSecrets, which closely tracks campaign contributions, supporters of the crypto industry spent over $133 million in the 2024 elections. Most of it went to Republican candidates, including Trump, but some recipients were Democrats, like Elissa Slotkin, elected to the US Senate from Michigan in 2024. By July 2024, Trump was singing a his new tune, promising to fire the Securities and Exchange Commission (SEC) chair and to establish a strategic Bitcoin reserve.
Once in office, Trump has talked of making the United States “the global capital of crypto.” He and his family have moved aggressively into the industry, raising questions about apparent conflicts of interest.
By March, Trump had signed an executive order to establish the strategic reserve. In May, he hosted a dinner at his private golf club in northern Virginia for 220 investors who had purchased his $TRUMP “meme token”.
A “meme token” is a cryptocurrency tied to virtual trends or personalities and having limited real world use. They are often used as a way to acquire quick profits. Various estimates as to how much Trump and his family realized from the sale of $TRUMP “meme tokens” generally settle at about $300 million. Even a supporter of cryptocurrency and Trump, Anthony Scaramucci, criticized the “meme token” as “Idi Amin level corruption.” (Known as the “Butcher of Uganda,” Amin ruled that country from January 1971 until October 1978, when he was deposed.)
Cryptocurrencies have benefited significantly from Trump’s advocacy. He has replace Biden’s appointments in key regulatory agencies with those sympathetic to the industry. With his prompting the US House of Representatives, not known for prolific production, passed the GENIUS Act in the spring and the US Senate followed with bipartisan support in June. That legislation creates a new regulatory structure for “stablecoins” a type of cryptocurrency typically pegged to the dollar. It is considered by some to be a step towards consumer protection, but in the judgement of the Brookings Institution, a nonpartisan Washington think tank, there is still a lot to do before the risk to financial stability will be manageable.
The whole scheme undergirding cryptocurrency appears to be in direct violation of the provisions in Article I, Section 8 of the US Constitution that grant to Congress powers to regulate commerce and currency. Warren Buffet, perhaps America’s most respected investment guru, has called cryptocurrency “rat poison squared” without any value and relying on speculation.
Nobel economists Paul Krugman and Simon Johnson also have denounced the lack of usefulness as well as the failure to contain risk.
In a recent Substack post, Krugman, the 2008 winner of the Nobel Prize in Economics, pointed out “crypto facilitates anonymous transactions that don’t leave a paper trail. Such transactions aren’t necessarily criminal, but many are.” He also noted that “Bitcoin has increasingly become an engine of predation.,” referring to practice of companies buying cryptocurrencies with borrowed money and then marketing shares to naïve investors who don’t realize the volatility of cryptocurrency.
Johnson, who won his Nobel in 2024, is highly critical of the political power that the crypto industry has acquired “primarily through political donations.” Identifying the greater transparency of US financial markets as a major advantage for the US when compared to other countries, Johnson warns that failing to provide systematic government oversight of crypto allows risk that threaten not only individual investors but the whole financial system. Referring to current legislation recently passed by Congress, Johnson says “Congress has exposed Americans and the world to the real possibility of the return of financial panics and severe economic damage, implying massive job losses and wealth destruction.”
A lead article in an early December edition of the Wall Street Journal warned that “turmoil in the crypto market” threatens traditional financial markets. Digital currencies had lost $1 trillion in value since October, including a bitcoin drop of more than 10 percent during the previous week. As a result, some crypto investors could be compelled to sell other assets.
A more recent article in the New York Times elaborated on the significant consequences of Trump’s embrace of crypto:
An array of boundary-pushing new crypto ventures have emerged this year, exposing more people to the volatile world of virtual currencies. More than 250 publicly traded companies are now stocking up on cryptocurrencies, which are digital assets that fluctuate in price like stocks, bonds or other investments.
A wave of companies have started offering products that make it easier to incorporate crypto into brokerage accounts and retirement plans. And industry executives are pitching regulators on a plan to offer coins that represent shares in public companies, which would be traded in a crypto-powered version of the stock market.
I don’t pretend to understand all the ins and outs of crypto, but it is clear that acceptance of its legitimacy, politically and financially, fueled by vigorous political lobbying and cultivated by Trump and his family, holds serious potential danger for America’s financial system. Citizens of the United States over the past forty-five years have had enough of financial film-flam and economic mumbo-jumbo. Let us have some transparency and stability for a change.
https://www.kaspersky.com/resource-center/definitions/what-is-cryptocurrency
https://www.forbes.com/sites/beccabratcher/2025/10/16/the-making-of-trumps-crypto-fortune/
https://www.nytimes.com/2025/12/17/technology/trump-crypto-unleashed.html