The Cryptocurrency Strategic Reserve Scam

Anyone with even a vague familiarity with cult leader, convicted felon, and failed President Donald Trump knows that he loves a scam, particularly one from which he can benefit financially. Therefore, Trump and cryptocurrency are a match made in heaven. During the presidential campaign, Trump became a strong backer of cryptocurrencies, leading to large donations from the cryptocurrency industry. Moreover, both Trump and his wife Melania launched their own meme coins. Both seem to take undue pleasure in fleecing their fans and supporters. Among the first executive orders that Trump signed was one promoting "digital financial technology" or cryptocurrency. Among other things, this EO created a working group on digital asset markets. This group was, in turn, charged with evaluating the potential creation of a digital asset stockpile. This weekend, thanks to a "truth" from Trump on his Truth Social social media network, this cryptocurrency stockpile gained additional attention.

To lead the working group, Trump chose David Sacks, a close associate of Shadow President Elon Musk, who, like Musk, is both South African and an early executive at PayPal. Sacks has been a large investor in various cryptocurrency ventures. Conflicts of interest seem to be almost a requirement for Trump appointees, and Sacks certainly has his share. As a big investor in cryptocurrencies, he is essentially a fox chosen to lead a working group on henhouses. The New Republic described the digital asset stockpile as a "blatant insider trading scam to make his billionaire crypto czar richer—funded by taxpayer money."

Trump's Sunday "truth" went further than the EO, saying that Trump had directed the working group "to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA." XRP (Ripple), SOL (Solana), and ADA (Cardano) are three cryptocurrencies with associated crypto platforms. After a brief panic among crypto investors, Trump added Bitcoin and Ethereum as currencies to be included.

Analysts seem to be divided over whether Trump is serious about a crypto strategic reserve or whether his "truth" was simply an attempt to pump up the crypto market that had been tumbling lately. One of the sharpest crypto analysts, in my opinion, Molly White — who authors "Citation Needed" — viewed Trump as trying to "breathe life back into the crypto markets". White also argued that the currencies were not chosen by random, but rather due to the connections to Trump by those associated with the currencies. For instance, Ripple — the company behind XRP — "contributed $48 million to crypto-focused super PACs and another $5 million to Trump’s inauguration fund."

The New Republic also noted that Trump's "crypto czar David Sacks has a venture firm linked to Bitwise Invests, one of the biggest crypto index fund providers. Bitwise holds significant amounts of the very same cryptocurrencies. Sacks promised that he sold his personal, direct holdings, but made no mention of his multiple indirect holdings." An unknown investor seemed to have incredible timing as the New Republic also reported: "just a few hours before Trump’s announcement, someone bought $200 million in Ethereum and Bitcoin, raising the question of who may have known about the plan ahead of time."

While Trump's weekend "truth" may have simply been aimed at juicing the crypto markets, the idea of a crypto stockpile is essentially the same thing on a larger scale. I have yet to see a good explanation for the need for such a stockpile. Not much information has been released about how it would work, but based on Trump's "truth", it would seem to involve U.S. taxpayer money being used to purchase large amounts of the five currencies in question and then somehow using them to stabilize financial markets in the future. I am skeptical that this would work in practice. What is clear is that it would take taxpayer dollars and put them directly into the pockets of crypto investors, many of whom are the same "tech bros" who are already accumulating much of the country's wealth. Some compare it to the Strategic Petroleum Reserve, but that seems like a poor comparison. If there is a shortage of petroleum, the reserves can be released. In contrast, there will never be a shortage of cryptocurrencies and, in any case, increasing the supply would make their price drop, which no investor would welcome. I really don't see how the crypto strategic reserve is anything more than an effort to make the Marc Andreessens of the world even richer than they are, all at the taxpayer's expense.