This was commissioned by a US magazine, but legal weren’t entirely happy — so it was spiked. I got a kill fee and I’m free to reuse the piece. Please enjoy.
(The editor took out “ephebophiles”; I’ve restored it for this edition.)
I normally avoid coarse language in the blockchain blog — but honestly, what else can you say about $TRUMP.
I put this in on 21 January, so I am hereby claiming the now-common Trump/Truss comparison as of that date, so there.
Coffeezilla facepalming at this ridiculous trash. [YouTube]
For many years, newly-reelected President Donald Trump was somewhere between barely interested and openly hostile to cryptocurrency. But then the crypto companies realized they could put money into campaign funding — and they went in hard.
In May 2024, Trump told the Libertarian National Convention that, if re-elected President, he would lend his support to crypto. In July, he spoke at the Bitcoin 2024 Conference. He gathered around himself people interested in crypto, particularly billionaires — who liked the idea of an authoritarian who would let them play fast and loose with the money but bail them out in times of trouble.
Trump was duly elected and seems happy to credit his crypto donors — who put more money into this last election than anyone previously had in history. It’s time now to reward his friends.
Trump did not attend a celebratory Crypto Ball on Friday 17 January. But Trump’s AI and crypto “czar,” Silicon Valley billionaire David Sacks, proclaimed at the event that “the reign of terror against crypto is over, and the beginning of innovation in America for crypto has just begun.”
Trump has planned early executive orders that name cryptocurrency as a national priority, remove capital gains taxes on crypto investments and create a crypto advisory council to advocate for the industry. These are expected soon.
The Trump team floated the idea of abolishing the Federal Deposit Insurance Corporation, the key component in U.S. financial stability. The FDIC’s offense seemed to be that it had discouraged banks from holding or dealing in crypto, in the interest of bank stability. Of the four bank collapses in 2023, two (Silvergate and Signature) were directly due to cryptocurrency exposure and a third (Heartland Tri-State Bank) to a crypto-based “pig-butchering” scam. Abolishing the FDIC would have destroyed consumer confidence in the banking system. But instead, Trump’s FDIC appointee, Travis Hill, plans to make the FDIC more friendly to “digital assets.”
Three days before taking office for the second time, Trump launched his very own “memecoin.” $TRUMP is marketed entirely on its “fun” value as “support” for the incoming president. The token was heavily promoted to Trump’s current supporter base.
There will be one billion $TRUMP tokens. The current circulating supply is 200 million; the other 80% are locked for three to twelve months by the issuer, CIC Digital, the Trump-affiliated company that previously released Trump’s NFT collection.
When the insiders’ $TRUMP tokens are unlocked, the family holders can dump these tokens into whatever market still exists for them. The insider dump will likely crash the coin unless Trump’s team can somehow maintain interest in it. Most meme coins fall to the first insider dump. A dump may not, however, lead to political fallout for Trump — going by his first term, there will be a flood of other outrages in the months between now and then.
Trump’s coins were bought mainly by crypto speculators, predominantly in China, who achieved notable day trading wins — and losses.
The First Lady, Melania Trump, also launched her own coin, $MELANIA. It crashed Trump’s own token on launch. Others took the two Trump tokens as the signal it was time to go all-in — mere hours after speaking at the inauguration, Reverend Lorenzo Sewell launched his own crypto token, $LORENZO, ostensibly to fund his ministry.
$TRUMP was trading on Monday around $50, which the press trumpeted as a market cap of $10 billion for the available supply and $50 billion for the full eventual supply. This would make the token the majority of Trump’s personal wealth — except that a crypto “market cap” can’t be treated as real. Crypto market caps are imaginary numbers designed to look good in headlines, rather than any sort of measure of money anyone could use. Crypto’s greatest problem has always been how to convert impressive book values into actual dollars — the suckers went home after the 2022 crash and, for all the talk of a Trump-led crypto revival, haven’t come back. It is unlikely that anyone could cash out millions of actual dollars from $TRUMP, let alone billions.
The use case for the Trump token is a way for the President and his family to make money for nothing. The other function of $TRUMP is as a way to straight-up bribe the president by buying in – and to do so from anywhere in the world.
In normal times, bribery would be an impeachment offense. But laws only work insofar as anyone is willing to enforce them. The Republican Party holds the House and Senate and the Supreme Court has spent the past four years enabling Trump as far as it possibly can. There is no-one who will stop bribery and foreign emoluments for Trump.
Many crypto insiders considered the token an exploitative embarrassment and feel it undermines the credibility of crypto and of Trump’s crypto promises. Trump’s one-time White House Director of Communications Anthony Scaramucci called $TRUMP “Idi Amin level corruption.” Author Scott Galloway called the token the “democratization of kleptocracy.”
Cryptocurrency lawyer Preston Byrne has mapped out possible legal vulnerabilities of $TRUMP. Trump’s token is similar to tokens that the Securities and Exchange Commission has fined as unregistered offerings of securities to the public. The SEC has rarely prosecuted meme coins or crypto tokens claiming to be collectibles, though this is likely because there are so many and only a limited capacity for regulatory response.
Byrne and other crypto observers think a flood of new initial coin offerings is likely. These had previously been treated by the SEC as unregistered securities and had all but stopped after multiple actions by the regulator. But acting chair Mark Uyeda has announced a new SEC crypto task force, to be led by fiercely pro-crypto commissioner Hester Peirce, and the new SEC is expected to be more friendly to token offerings.
Even assuming a Trump-picked SEC gives the presidential token a pass under securities laws, any buyer may bring a civil action under securities laws — even as the terms of service for buying the token require the buyer to agree not to participate in a class action against the issuer. The Supreme Court has ruled broad immunity for presidents in criminal cases — but not in civil cases, as Bill Clinton discovered in Clinton v. Jones.
State securities regulators also bring regulatory actions — often in concert — and the federal government cannot stop them. New York has been particularly active in bringing cases against crypto firms in the past few years, such as Digital Currency Group, Celsius Network, and Tether, Inc.
The 2022 crypto crash worked very like a miniature 2008 financial crisis: overleveraged assets, huge dollar-denominated book values for assets that were worthless, and a six-month chain reaction from the Terra-Luna collapse in May to the FTX collapse in November.
Even when the crypto world tries to work with the world of actual money, they fundamentally don’t understand how anything works and resent the idea that any of the rules should apply to them. But they still want the government to save them when it all goes south.
Bureaucrats and regulators had one worry: contagion from the volatile, crooked and incompetent crypto market to the real economy, where people live and work. The contagion that they worked for years to head off is now presidential policy. What happens now?
Trump’s lineup of drunkards, conspiracy theorists, ephebophiles and general incompetents has been selected for loyalty rather than ability. Nobody should expect good financial management from the second Trump administration.
In the UK, the 2022 Liz Truss administration released a mini-budget drawing on extreme libertarian ideology. The budget promptly crashed the pound, caused a domestic financial crisis and sent home mortgage costs up. Truss was rapidly deposed and became the shortest-serving prime minister in British history — and later, a cheerleader for Donald Trump.
The second Trump administration is not likely to provoke as sharp a disaster — and the U.S. has no equivalent mechanisms to the UK’s ability to rapidly boot an unpopular leader. Trump has no particular economic ideology. His followers hold various and contradictory strains of belief, all included in the Project 2025 document — a compendium of right-wing grievances from which it would be impossible to implement all of even just the economic plans.
But Trump is determined on some plans, such as hugely inflationary tariffs and mass deportations that would remove the workers who pick most of the food. He is also determined to let a flood of fake money run by crypto shysters into the real markets. The artificial intelligence bubble is also likely to pop during his second term.
Markets will lose confidence in Trump and a crash will follow. Volatility is attractive to traders, but requires a framework of stability. Trump is frantically dismantling competence in favor of loyalists. Trump’s only strategy is to insist that up is down ever louder — but financial gravity still exists.
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