Donald Trump has put cryptocurrency front and center on his path to the White House, pushing the price of Bitcoin to record levels and sparking intense debate.
The next US president even indicated the possibility of creating a strategic reserve of Bitcoin.
On the New York Stock Exchange this week, CNBC host Jim Cramer asked Trump if he would go ahead with such a plan.
He replied: “Yes. I think so. We will do something great in the field of cryptocurrencies.”
Since Trump won the US election, Bitcoin has risen above $100,000 for the first time. He is now filling his department with pro-crypto advisors, and appears to support the idea of a Bitcoin reserve held by the US Treasury, which analysts say could boost the price by another 50 percent. Supporters say it could put the United States at the forefront of technology they consider revealing — while critics say it will lead to increased wealth inequality.
Trump turned to cryptocurrencies
Trump has recently turned to the issue of cryptocurrencies for once Call Bitcoin “Scam” against the US dollar. But during the campaign, he advertised himself as “the first major party candidate in American history to accept donations in bitcoin and cryptocurrencies.”
It is unclear what caused him to change his mind. But he and his family They launched their own cryptocurrency During the last campaign.
He said that was only the beginning.
“I am laying out my plan to make sure that the United States will be the cryptocurrency capital of the planet and the bitcoin superpower of the world,” he said at a bitcoin conference in November.
He also appointed billionaire David Sachs to be the new “AI and cryptocurrency czar.”
Sachs was part of the so-called “PayPal Mafia,” a group of founders and employees (including fellow Trump appointee Elon Musk) who built the fintech company in the early 2000s and have since founded or played roles in… Major in other technology companies.
He has been an outspoken supporter of Bitcoin and cryptocurrencies dating back to early 2013.
“Bitcoin has the potential to become the next Internet – the Internet of Money. I’m buying” Published on X on May 30, 2013when Bitcoin was trading for just $129 USD. If he invested $1,000 then, it would be worth about $800,000 today.
Now, Sachs has a key job within the incoming administration: shaping how the industry is regulated. In July, he posted on X that the industry’s main desire was a clear legal framework.
“If Trump wins, industry will get that, and more innovation will happen in the United States.”
Booking is not a new idea
The idea of a strategic reserve was gaining momentum even before Trump won the election.
A bill proposed this summer by Republican Sen. Cynthia Lummis of Wyoming, a Trump ally, would require all bitcoins held by any federal agency to be transferred to the Treasury Department to be held in a strategic bitcoin reserve.
The Secretary of the Treasury will also be charged with purchasing no more than 200,000 bitcoins annually over a five-year period, for a total of 1 million bitcoins.
The US Treasury will be required to hold these bitcoins for at least 20 years.
Cryptocurrency enthusiasts say the reserve will position the United States as a global leader in the world of cryptocurrencies, which they see as the future of the financial system. They also say that Bitcoin will soar to new heights if the new administration supports the idea of a strategic reserve.
“I think it’s heading into the $250,000 to $500,000 per coin range,” said analyst Ronnie Moas, founder of Standpoint Research.
Moas says the Trump presidency has brought new wind into the sails of cryptocurrencies, and the moment Bitcoin reserves are announced, the price will rise again.
“(It) will move the price overnight by 25 to 50 percent because you will have a flood of people trying to jump in front of government purchases, which will take months or weeks to take off,” Moas said this week.
Moas is no fan of Trump, calling him a “fool” and a “con artist,” but says he’s right about Bitcoin.
Others insist that creating a Bitcoin reserve fund is a fundamentally bad idea.
Among the naysayers is Larry Summers, an economist and former US Treasury Secretary.
Summers says there might have been a good argument in favor of creating a strategic petroleum reserve or building gold deposits at Fort Knox a century ago.
He says there is no such argument in favor of buying billions of dollars in cryptocurrencies, because they remain an unproven and volatile financial asset.
“Some of what is being said — the idea that we should have some kind of national bitcoin reserve — is crazy,” Summers said on a Bloomberg TV show. Wall Street Week With David Westin.
Front burner25:51How Trump is fueling the cryptocurrency boom
A well-funded push for a crypto-friendly government
The push for more crypto-friendly governance in Washington is strong and well-funded.
Cryptocurrency companies spent more than $133 million to support pro-crypto candidates in races across the United States in the November election, according to the British Daily Mail. Open secretswhich tracks US campaign spending and lobbying. This would constitute about one-third of total direct corporate contributions to super PACs.
It was not only the president who won, but several pro-crypto candidates in the Senate and House of Representatives also won in key races. Candidates who pushed for more restrictions on cryptocurrencies lost.
Among them was Democrat Sherrod Brown, the current chairman of the Senate Banking Committee and an outspoken critic.
In what will likely be his final statement with the committee, Brown warned of the risks of issues including algorithmic pricing, artificial intelligence, and of course, cryptocurrencies.
“All of these risks have one thing in common: They all have the potential to take more money from working Americans…and direct it to the same corporate elite that always seem to get ahead.”
Last year, in its first report on cryptocurrency fraud, the FBI found that US consumers lost more than US$5.6 billion last year through cryptocurrency-related fraud, an increase of 45 percent from 2022.
Just this week, Reuters I mentioned Trump’s cryptocurrency project has partnered with a platform that authorities and financial experts say is used by criminals and Iranian-backed militant groups such as Hamas and Hezbollah.
Critics say the potential for fraud is all the evidence they need that cryptocurrencies should be kept out of the mainstream. Supporters will say this simply highlights the importance of building what Sachs described as “a clear legal framework within which to operate.”
Either way, Trump’s embrace of cryptocurrencies has already injected new interest, new value, and new fears. He still has five weeks to officially take office.
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