Donald Trump wowed the crowds Saturday at the Bitcoin Conference by promising to make the U.S. the “crypto capital of the planet.” But he has some work to do to iron out the contradiction in his crypto-currency policy.
“The moment I’m sworn in, the persecution stops and the weaponization ends against your industry,” the former President told 3,000 or so cheering crypto enthusiasts in Nashville. If nothing else, he recruited many more campaign donors, which was no doubt part of the plan.
Mr. Trump is right that Biden regulators have targeted the industry, often unfairly. Securities and Exchange Commission Chair Gary Gensler has sued crypto companies for violating securities laws that don’t offer clear guidance on crypto investing. Regulators have sought to deter banks from providing services to crypto companies, in part by warning about their risks to “safety and soundness.”
During the 2023 regional bank turmoil, regulators seized Signature Bank, which had a market niche serving crypto companies, though its executives thought it could withstand a run on deposits. Former Rep. Barney Frank, who had served on Signature’s board, alleged that regulators were trying “to send a message to get people away from crypto.”
Mr. Trump on Saturday vowed to end what he called this government “Operation Choke-point 2.0” against the crypto industry. Choke-point refers to the stealth campaign by Obama-era regulators to coerce banks to stop serving payday lenders and gun retailers. …
Mr. Trump is a convert to crypto enthusiasm. Five years ago he called bitcoin a “scam,” claiming its “value is highly volatile and based on thin air.” He had a point about the latter, as its price has often moved sharply. But now he says “bitcoin stands for freedom, sovereignty and independence from government coercion and control.”
But freedom from government isn’t what he’s proposing. He wants all future bitcoin to be made in America, which is a limit on freedom and would require a much bigger electric grid since bitcoin mining is energy intensive. He also floated establishing a “strategic national bitcoin stockpile,” which appears to be based on a proposal by Sen. Cynthia Lummis, a Wyoming Republican.
Ms. Lummis wants the U.S. Treasury to buy one million bitcoins — about $68 billion at current prices — over five years. This would presumably be a national strategic reserve, like the Strategic Petroleum Reserve. “Bitcoin is a great store of value. Over the last four years or so it has increased about 55% per year,” she says. But bitcoin’s value plunged in 2022 as the Federal Reserve tightened money.
She says the government could reduce the national debt by investing in bitcoin. Not if its price craters, or politicians raid the reserve to pay for spending or to bail out businesses if there’s a crypto crash. That’s what politicians always do — see the misuse of the petroleum reserve by several Presidents. The Treasury would also have to borrow to buy bitcoins for the reserve in the first place. Crypto investors may find that getting in bed with the government is risky business.
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If crypto currencies really are a libertarian vehicle to invest free from political vagaries, then they should trade on their own without government help. Regulators can protect investors from scammers and lay out transparent rules. But Mr. Trump’s sketchy plan reflects the contradictions of much of his MAGA platform, which advocates deregulation but at the same time more government industrial policy.
If Mr. Trump wants to strike a contrast with Kamala Harris, he might instead call for government getting out of the business of picking winners and losers — crypto and bitcoin included. It never ends well.
