WASHINGTON: Donald Trump on Friday hosted top cryptocurrency players at the White House, a political boost for an industry that has struggled to gain legitimacy – and where the Republican president faces conflict of interest concerns.
US crypto investors were major supporters of Trump’s presidential campaign, contributing millions of dollars towards his victory in hopes of ending the deep scepticism of Democrat Joe Biden’s administration towards digital currencies.
“I think it’s safe to say the administration wants to end the war on crypto. We promise to do that,” the president’s “crypto czar,” Silicon Valley investor David Sacks, told reporters as he entered the meeting.
Trump now has significant financial ties to the sector, partnering with exchange platform World Liberty Financial and launching the “Trump” memecoin in January.
First Lady Melania Trump announced a memecoin of her own, $MELANIA, one day before her husband’s 20 January inauguration.
Sacks invited prominent founders, CEOs and investors, along with members of a Trump working group, to craft policies aimed at accelerating crypto growth and providing legitimacy that the industry has long sought.
On Thursday, Trump signed an executive order establishing a “Strategic Bitcoin Reserve,” a move Sacks said made good on a campaign promise to an increasingly important component of his supporters.
Summit guests included twins Cameron and Tyler Winklevoss, founders of crypto platform Gemini, as well as Brian Armstrong of Coinbase and Michael Saylor, the boss of major Bitcoin investor MicroStrategy.
‘Innovation framework’
For believers, cryptocurrencies represent a financial revolution that reduces dependence on centralised authorities while offering individuals an alternative to traditional banking systems.
Bitcoin, the world’s most traded cryptocurrency, is heralded by advocates as a substitute for gold or a hedge against currency devaluation and political instability.
Critics, meanwhile, maintain that these assets function primarily as speculative investments with questionable real-world utility that could leave taxpayers on the hook for cleaning up if the market crashes.
Asked about the risky nature of crypto investing, Sacks said that the government’s embrace of the industry did not amount to investment advice and warned that digital currencies were highly volatile, encouraging Americans to talk to an adviser before entering the market.
“My job is not to encourage people to buy crypto. My job is to create an innovation framework for the United States,” he added.
The proliferation of “memecoins” – cryptocurrencies based on celebrities, internet memes, or pop culture items rather than technical utility – presents another challenge.
Much of the crypto industry frowns upon these tokens, fearing they tarnish the sector’s credibility, amid reports of quick pump-and-dump schemes that leave unwitting buyers paying for assets that end up worthless.
Once hostile to the crypto industry, Trump has already taken significant steps to clear regulatory hurdles.
Under Thursday’s executive order, the bitcoin stockpile will be composed of digital currency seized in US criminal proceedings.
Sacks said that if previous administrations had held onto their digital holdings over the past decade, rather than selling them, they would be worth $17 billion today.
Trump has appointed crypto advocate Paul Atkins to head the Securities and Exchange Commission.
Under Atkins, the SEC has dropped legal proceedings against major platforms like Coinbase and Kraken that were initiated during Biden’s term.
The previous Democratic administration had implemented restrictions on banks holding cryptocurrencies – which have since been lifted – and allowed former SEC chairman Gary Gensler to pursue aggressive enforcement.
Sacks said the Biden administration treated the industry “like criminals” and launched investigations when there were no clear rules of the road.
“Crypto founders would tell me over and over and over again, we just want to know what the rules are… And they were never told those rules,” he said.
However, setting those rules will likely require action by Congress, where crypto legislation has remained stalled despite intense lobbying efforts led by investors.
