Trump’s crypto-ligarchy

It will blow up in his face — and possibly take the financial system with it

Friends,

As of Friday, the Trumps’ cryptocurrency meme coins — the $TRUMP and $MELANIA cryptocurrency coins — had a combined market value of about $6 billion.

Days before taking the oath of office, Trump announced on his social media platform the creation of the $TRUMP coin, featuring Trump’s image from the July assassination attempt and said: “Join the Trump Community. This is History in the Making!”

The $MELANIA coin soon followed.

Despite no details about the coin’s value, use, or risks, Trump supporters, gamblers, and those wishing to suck up to Trump bought it — sending the coin’s price into the stratosphere. On paper, the Trump family is now several billion dollars richer.

Trump once denounced crypto, but as the crypto industry poured tens of millions of dollars into 2024 campaigns, he changed his mind. Not only did he see the political power of the crypto industry he saw an opportunity to make a pile of money.

He then promised to make the United States the “crypto capital of the planet.”

In September, the Trump family started World Liberty Financial, which they marketed as a platform to facilitate borrowing and lending in digital currencies. (Trump receives a cut of the sales of WLFI, the cryptocurrency associated with the platform.)

Now that he’s taken office, Trump plans to make billions off his presidency by implementing policies that favor crypto.

The truth about crypto

Cryptocurrencies serve no useful purpose other than the purchase of other crypto assets, money laundering, extortion and scams. As economist Paul Krugman has said, their market value rests on nothing but “technobabble and libertarian derp.”

They also use huge amounts of energy.

And if they infiltrate Wall Street, they could destabilize the entire financial system.

The crypto industry has a dubious reputation. Sam Bankman-Fried, founder of FTX, one of the world’s biggest crypto exchanges, was last year sentenced to 25 years in prison for fraud. Changpeng Zhao, founder of a rival exchange, has spent four months locked up for money-laundering.

But the richest people in America with huge power — the oligarchy, including Trump — support cryptocurrencies. Not only can they make a fortune, but crypto advances their long-term aim of shifting financial controls out of a democratically elected system of government and into their own hands.

Trump II and crypto

Now that he’s president, Trump is actively promoting crypto — reversing Biden’s attempts to prevent the crypto industry from infiltrating Wall Street.

Biden’s tight rules made it prohibitively expensive for banks to hold digital assets on behalf of clients and stopped them from developing their own crypto products, such as stablecoins (tokens pegged to the dollar or other assets).

The Federal Deposit Insurance Corporation (FDIC), a watchdog, stopped dozens of such projects on the basis that it did not know how digital assets ought to be treated in regulatory filings.

With Trump, though, banks and the crypto industry are now pushing in the same direction and face little resistance. New and enormously profitable forms of risk-taking are emerging — for a small group of people able to take such risks and able (like the Trump family) to profit off their own crypto products.

Trump is putting crypto-friendly people into place at key federal agencies, boosting its prospects. In December, he picked Washington lawyer Paul Atkins, a known crypto booster, to chair the Securities and Exchange Commission, America’s main financial regulator.

Last week, the Securities and Exchange Commission altered its guidance so that financial institutions no longer have to account, on their own balance-sheets, for crypto assets held on behalf of customers. The SEC rolled back accounting guidance that had deterred banks from getting involved with crypto.

Trump has tapped the venture investor and digital currency enthusiast David Sacks to oversee administration policies on crypto (and artificial intelligence).

Then, this past Thursday, Trump issued an executive order committing the Trump administration to “protecting and promoting” the crypto industry:

“The digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our nation’s international leadership. It is therefore the policy of my administration to support the responsible growth and use of digital assets.”

The order gives his administration authority to establish a national cryptocurrency stockpile — a stash of digital coins that the crypto industry has spent months lobbying the new administration for because it further legitimizes crypto and adds to the demand for it.

Trump’s order also prohibits the creation of a “central bank digital currency” overseen by the government. And the order promises “fair and open access to banking services” for crypto (responding to complaints from crypto companies that banks have denied them accounts).

In effect, Trump is writing the rules for a business venture from which he and his family are personally profiting. It could earn them hundreds of billions of dollars.

If you’re outraged by this, fine. You’re probably outraged by a large number of things Trump has done since January 20.

The larger picture

The real significance of such blatant profiteering off the highest office in the land is what it reveals — not just about Trump but about the entire oligarchic enterprise he fronts for. It is likely to contribute to a vast wave of public alarm and disgust.

Just as Elon Musk is demonstrating how huge wealth can create enormous personal political power, Trump is demonstrating how enormous personal political power can create huge wealth.

Musk sank a quarter of a billion dollars into electing Trump and was rewarded with a key spot as director of the so-called department of government efficiency, or DOGE (Dogecoin, itself a crypto token, has benefited from Musk’s vocal support) — creating vast conflicts of interest over crypto and Musk’s myriad businesses (X, SpaceX, and Tesla, which are regulated by federal agencies and also major government contractors).

This dynamic — great power creating huge wealth, and huge wealth creating great power — is central to the oligarchic takeover of America. And both are premised on the corruption of democracy.

Any wealthy person, corporation, or foreign leader wishing to curry favor with Trump now has a particularly easy means — just buy $TRUMP and $MELANIA cryptocurrency tokens.

The corruption will grow worse, because neither Trump nor Musk has any sense of limits. Nor do any of the oligarchs surrounding them, such as David Sacks, who Trump picked to oversee his administration’s policies on crypto and artificial intelligence.

Like Musk, Sacks serves as a “special government employee,” which does not require Senate confirmation or full financial disclosure, and allows Sacks to maintain his business interests while influencing policy. Expect more conflicts of interest.

As crypto and banking begin to merge, bank deposits will become more vulnerable to movements in the crypto market, and banks more vulnerable to runs. That’s what happened at Silvergate and Signature, two crypto-focused banks that collapsed in 2023. Both were broken by a tumble in cryptocurrency prices that began in late 2021 and then reverberations from FTX’s collapse.

The biggest beneficiaries of all this are the highest rollers — the oligarchs who have been pushing crypto for years. And now Trump is in on it and stands to personally gain billions, as will those seeking to curry his favor by buying his coin.

The endgame

The American public doesn’t abide flagrant self-dealing. We don’t want public officials personally profiting by decisions that are supposed to be made in the public’s interest.

You may be thinking: “But Trump has been profiteering for years off his presidency, as have members of his family. And they’ve gotten away with it.”

True, but what’s happening now is much bigger and far more visible. It involves an entire industry (crypto), and conspicuous members of the American oligarchy who are investing in it, including the president and officials around him.

And it’s inherently risky. For oligarchs, the rise of digital finance provides large moneymaking opportunities. But for the rest of us, it increases the risk of another financial crisis.

Unbound greed combined with unconstrained power is an explosive combination. When the blowup comes, it will take Trump, Musk, and the oligarchy with it.