Beware the "Crypto Reserve" Con

...a felon and serial bankrupter trying to line his -- and his crypto donors' -- pockets

In the maelstrom of disorder that is our government today, one story that has gone way under-reported is trump’s stated intention to establish a “strategic cryptocurrency reserve.”¹

Now that trump signed an executive order last night to establish such a reserve — and scheduled a “crypto summit” for today — one hopes that there will be a lot more intense scrutiny of this idea.

Why do we need a “strategic crypto reserve”? What is it a “reserve” against? And how protective is a wildly speculative, wildly fluctuating “digital asset” with no inherent value?

Crypto looks to me like a 21st century counterfeiting venture invented for their benefit by the emerging class of “tech bros” who wish to take over the world, at least financially. A venture that adds no hard assets or products and whose massive energy requirements to run its computing power are a drain on the grid and a contributor to climate change.

As The Atlantic’s Annie Lowrey writes:

…President Donald Trump announced that he is moving forward with a plan to create a strategic cryptocurrency reserve, purchasing bitcoin and ether, as well as the more esoteric instruments XRP, solana, and cardano. The reserve will ‘elevate this critical industry after years of corrupt attacks,' Trump wrote on… Truth Social. ‘I will make sure the U.S. is the Crypto Capital of the World.'

For the taxpayer, the purpose of such an initiative is obscure. The crypto industry is a hyper-speculative casino. It is not essential to the American financial system, nor are cryptocurrencies essential to the American public. Workers cannot put bitcoin in their gas tanks; parents cannot feed XRP to their kids; businesses do not need cardano to build roads, light cities, produce vaccines, or provide loans to homeowners and entrepreneurs.

Yet…the purpose is obvious. Trump’s commerce secretary, his AI and crypto czar, and several of his most influential policy advisers are crypto investors, and the president launched his own memecoin. Establishing a reserve would boost prices, enriching these public officials and the crypto magnates donating tens of millions of dollars to Republican campaigns. It would not be a public investment, but a private giveaway—one of a mounting number in the Trump era. (Emphasis mine.)

Princeton professor and Nobel Prize winning economist Paul Krugman writes:

It’s important to understand that although cryptocurrencies have been around for a while — Bitcoin was introduced in 2009 — no one has yet found significant legal uses other than pure speculation. As far as I can tell, actual transactions involving cryptocurrencies almost always involve criminal activity, such as money laundering or paying ransom to extortionists.

So this proposed con is no more than another trump grift and gross conflict of interest (Report: Creators of $TRUMP Meme Coin Made $350 Million in 3 Weeks) meant to further enrich him. Melania has, of course, also gotten in on the grift, as reported by the BBC:

Incoming first lady Melania Trump has launched a cryptocurrency on the eve of her husband's inauguration as US president. The announcement comes after President-elect Donald Trump launched the $Trump cryptocurrency. Both coins have risen but have seen volatile trade. "The Official Melania Meme is live! You can buy $Melania now," she posted on the social platform X on Sunday. Disclaimers on the websites of both the $Trump and $Melania coins said they were "not intended to be, or the subject of" an investment opportunity or a security.

…and it will also be a payback to the crypto kings that lavishly supported trump’s reelection campaign.

1. As Paul Krugman, among others, has written, the term “strategic cryptocurrency reserve” is used to mimic the “strategic petroleum reserve,” which is really a reserve and really is strategic, to be there in times of shortages or warfare. Krugman writes, ‘While a “strategic crypto reserve’ sounds a lot like the Strategic Petroleum Reserve — a national stockpile of oil to be drawn down in the event of an energy crisis — it would consist of nothing but a hackable string of ones and zeroes on servers. It’s important to understand that although cryptocurrencies have been around for a while — Bitcoin was introduced in 2009 — no one has yet found significant legal uses other than pure speculation. As far as I can tell, actual transactions involving cryptocurrencies almost always involve criminal activity, such as money laundering or paying ransom to extortionists.