A federal crypto reserve would only benefit the scoundrels and scammers who helped fund Trump’s presidential campaign.
by Chris Lehmann
The Nation
President-elect Donald Trump’s pledge to create a federal crypto reserve is a terrible idea. The most vivid proof was supplied by the crypto markets themselves, which saw Bitcoin prices rocket into six figures after Trump nominated a raft of crypto-boosters for the incoming administration and amid speculation that the federal government would soon hoard the data-mined tokens.
The theory behind a currency reserve is that it serves as a hedge against inflation. In this view of things, gains in the crypto market can help release pressure on prices in the real economy, since the government’s reserves would appreciate at rates faster than inflation. But to have the prices of an asset rally to unprecedented heights on the mere possibility that it may form part of the US Treasury’s holdings is a sign that it’s less a storehouse of durable value than a volatile plaything for speculators and scammers. Indeed, the extreme volatility of crypto is why it’s subject to persistent market manipulation of the sort made infamous by the now-jailed crypto baron Sam Bankman-Fried: When an asset creates no economic worth of its own, the volume traders who build markets around it must commandeer a vast infrastructure of smoke and mirrors to disguise the dirty secret of its complete inutility. This is also why, amid the pre-holiday fever of crypto-speculation, news broke that North Korean hackers had engineered a $308 million theft of holdings from crypto broker DMM Bitcoin this spring—a heist that forced the company to shut down earlier this month.