It's been an up-and-down year for cryptocurrency since President Trump took office, pledging to make the U.S. the "crypto capital of the planet." So when he made his latest pro-crypto announcement, posting on Sunday that the U.S. government would purchase and hold digital tokens in a "Crypto Strategic Reserve," prices briefly surged.
So did the blowback. There were questions over why a reserve was needed, whether it would benefit only crypto holders and if it presented anther conflict of interest for Trump, who has selected a friendly regulator for the industry he and his family are invested in.
Trump said on social media that a crypto reserve would include lesser known and more volatile cryptocurrencies like XRP, solana and cardano. He later posted that bitcoin and ether — two of the oldest and most prominent digital currencies — would join.
There aren't many details on how the reserve would work or how the government would acquire the assets. A bill introduced in Congress directs the government to buy one million bitcoins over five years, The New York Times reported. That would be worth about $92.6 billion at today's prices, per The Times.
Trump pledged on the campaign trail last year to support a "strategic national bitcoin" stockpile. Crypto "might not be exciting, but it’s going to make a lot of money for the country," he told reporters in January as he signed an executive order to boost the development of the industry.
Supporters say diversifying the government's holdings would benefit taxpayers, but critics say crypto is too volatile. As social media buzzed over Trump's news, prices fell on Monday afternoon back to where they were before his announcement, The Associated Press reported.
“There is just genuinely no economic or policy argument for this,” Jordan Weissmann, a consumer affairs reporter at Yahoo Finance, posted on X. “It’s a pure transfer of wealth to certain crypto holders.”
Others noted that Trump’s "crypto czar," David Sacks, owns a venture capital firm that may hold stakes across crypto firms and tech companies that stand to benefit from increased crypto valuations.
“Sorry poor people, no money left for your Medicaid,” Bloomberg columnist Matthew Yglesias posted on X, “we had to give it to David Sacks so he can use it to manipulate the crypto market for the benefit of handpicked insiders.”
“This is a direct transfer of wealth from the U.S. treasury to David Sacks and other crypto barons,” investigative journalist Ryan Grim wrote. “The railroad and coal tycoons of the 19th century could never have dreamed of this level of heist.”
The startup and investor crowd didn't seem impressed, either. “For what purpose? How is it strategic at this moment in time to own crypto as opposed to say health care, closing the border or lowering the debt?” angel investor Jason Calacanis posted. “This will be the issue that derails [Trump’s] second term.”
Trump, who said in his first administration that crypto's "value is highly volatile and based on thin air," reversed course last year and portrayed himself as the savior of an industry the Biden administration had cracked down on. Crypto donors spent over $130 million on Trump and other pro-crypto candidates' campaigns.
After Trump nominated crypto advocate Paul Atkins to chair the Securities and Exchange Commission, the agency that oversees the industry, Bitcoin prices soared to over $100,000 for the first time.
Crypto prices have been up and down since Trump took office. As they slid last week, Trump's son Eric posted "Buy the dips!!!" on X.
Trump and his sons are promoters of World Liberty Financial, a crypto trading business they started last fall with Steve Witkoff, a co-chair of Trump's inaugural committee and Middle East envoy. The Trumps are not owners or employees of the platform but can receive a cut of the sales of its cryptocurrency.
Days before his inauguration, Trump and wife Melania launched their own meme coins. The highly volatile digital currencies generated billions of dollars for the president, at least on paper, and prompted criticism from some in the crypto community who viewed them as a gimmick. The SEC said last week that meme coins are more like collectibles than securities, and won't face regulatory oversight.
Trump's social media company might need approval from his administration as it launches a financial services firm. Some of its financial products, such as bitcoin ETFs, need approval from the SEC before they can be created, listed and traded.
Trump said he will host a "Crypto Summit" at the White House on Friday for industry leaders. The summit will be chaired by Sacks.
Shares