Trump & Crypto: What Could Go Wrong?
February 19, 2025
Trump once denounced the whole cryptocurrency thing as a big scam. (He knows from scams.) But he got the religion, after its libertarian government-hating cultists flocked to his campaign. And days before taking office, he launched his own crypto “coin” (called $TRUMP).* Accompanied by a disclaimer that this was “not intended to be” an investment opportunity (wink wink); with buyers expressly barred from any legal complaint.
Only a fifth of the billion “coins” created were offered publicly, the rest kept by Trump. Issued at $7, the market price swiftly peaked at $75, making his own holdings worth scores of billions (on paper). It has since slumped to $17, and most buyers have lost money.
Trump loves selling stuff — bibles, sneakers, t-shirts, collector cards, real estate classes (his $25 million “Trump University” fraud) — but this is different. Nothing one can use or even put on a shelf. Despite the sly disclaimer, he’s simply selling here a bet that the “coin” (not even a piece of metal) would rise in price. People’s bets by themselves put money in his pocket.
So blatantly janky was Trump’s scheme that even prominent crypto bros slammed it as undermining the industry’s credibility (so reports the first line of Wikipedia’s relevant page). “Stupid and embarrassing” said one big player. Pots calling a kettle black? But also quoted are legal experts, deeming the scheme not only “predatory” and “corrupt,” but also an affront to federal ethics strictures.
In two big ways. First, favor seekers can bribe the president via “coin” purchases, enriching him. Secondly, there’s a huge conflict of interest given his power over crypto regulation.
Trump has already gutted the previous administration’s efforts to protect the public here, appointing crypto enthusiasts to key positions overseeing financial markets. A January 23 executive order decreed that henceforward digital assets would play “a crucial role in innovation and economic development” both here and globally. And the government itself may even buy them, for a “strategic cryptocurrency reserve” (like our Strategic Oil Reserve) — further bolstering prices and rewarding crypto bros.
A 2/1 analysis in The Economist probes what all this might mean, seeing banks and Wall Streeters, previously leery of crypto, now getting the religion too. “Expect, as a consequence, new and enormously profitable forms of risk-taking.” Well, Trump himself has, as noted, already profited enormously — but not by taking risks. By exploiting others’ risk-taking.
However, will all this, the article’s subhead queries, “end in disaster?” I have the queasy feeling we’ve seen this movie before. The 2008 financial crisis was rooted in another investment vehicle — far riskier than first understood — “collateral mortgage obligations.” Confession: I myself fell for that.
But not for crypto. A year ago I reviewed here a book on the subject, whose key takeaway is that there’s no there there. As with $TRUMP, no crypto asset is actually an asset. No more than is your bet that the Eagles will win a football game. The whole stock market’s been called a big casino, but the difference is that buying a stock gives you a small piece of a going business. With obvious tangible value. And even those pre-2008 mortgage securities gave you a piece of an actual asset. Crypto does not.
Instead, it’s just a bet that other people will bet too, driving up the price. True-believing crypto-bros have done exactly that, pushing Bitcoin’s price from pennies in 2010 to near $100,000 now. But this is obviously a self-limiting phenomenon. Trees can’t grow to the sky. (And at least trees are real things.) Bitcoin may be ripe for a huge crash. What else will fall with it?
Cryptocurrency was originally conceived as a path to freedom from government’s role in the economy via its managing the money supply. Thus its appeal to extremist libertarians. Though the idea of crypto displacing conventional money is deeply flawed, not least because its value has been so volatile. Furthermore, that whole scene has been chronically plagued by manipulation and massive frauds. And being untraceable by design, it’s a vehicle for money-laundering, illicit transactions, and other sorts of criminality.
Now Trump is shoving our whole financial system toward crypto immersion. What could go wrong?
* Then came too a Melania “coin.”