“Bitcoin, it just seems like a scam. I don’t like it because it’s another currency competing against the dollar.”
Quite so, but this was not the chairman of the US Federal Reserve offering the usual, officially sceptical view of crypto, or even the notoriously anti-crypto Gary Gensler, chairman of America’s financial regulator, the Securities and Exchange Commission (SEC).
No, it was actually Donald Trump on Fox News back in June 2021. Everyone is entitled to change their mind, I suppose, but Trump’s conversion to the joys of crypto has been positively Damascene; today he calls himself the “crypto president”, and he is stacking his incoming administration with crypto cheerleaders. For crypto fans, it’s been quite literally like a second coming.
“There has been an effort in the Washington bureaucratic swamp to stifle innovation… but President Trump will deliver on his promise to encourage American leadership in crypto,” Brian Hughes, Trump’s transition team spokesman, says.
As red flags go, there can be few more glaring than this; the promise to further deregulate an asset class that has become a natural home for speculators, crooks, fraudsters, money launderers and drug dealers is almost guaranteed to end badly.
It is as if the lessons of the gloriously named Sam Bankman-Fried, now serving 25 years in jail for multiple crypto-linked embezzlement, money laundering and political donation violations, have already been completely forgotten.
And it’s not just this relatively recent scandal. Significant deregulation of financial markets nearly always eventually results in financial scandal and crisis.
You can set your watch by it; let finance off the leash and five to 10 years later there will be an almighty explosion, sometimes – as happened in the financial crisis 15 years ago – involving catastrophic collateral damage to the economy and costs to taxpayers.
It surprises me in some respects that the cycle of financial deregulation has turned quite as quickly as it has given how recent the last experience of disaster was; normally it takes several decades for all institutional knowledge of the previous crisis to be forgotten, allowing policymakers and practitioners to go for broke anew.
But in Trump, the lobbyists have found a worthy and seemingly easily bought champion, and it’s once more off to the races.
The president-elect’s crypto policy team is already extensive. The new chairman of the SEC is to be the crypto-friendly Paul Atkins, while the former PayPal chief operating officer and crypto enthusiast David Sacks has been appointed “White House AI and crypto czar”.