Among the executive orders issued on Jan. 23 by President Donald Trump was one which creates a “U.S. strategic reserve of cryptocurrency” and which called for protection of the U.S. dollar “including through actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.” The order also barred any further work by the Federal Reserve, which departing Treasury Secretary Janet Yellen had called for, on creation of a central bank digital currency by the Federal Reserve.
How providing dollar backing for cryptocurrencies would “protect the dollar” would be mysterious to anyone; but the intention here is really to provide cryptocurrency backing for the dollar!—that is, for short-term Treasury bills.
This policy, which is a significant danger to the Treasury market at a time of continuing explosive growth in U.S. public debt, is being run by venture capitalist David Sacks, the White House “cryptocurrency czar”; Commerce Secretary Howard Lutnick, whose broker-dealer firm Cantor Fitzgerald manages the largest “stablecoin” Tether; Treasury Secretary Scott Bessent, whose hedge fund has very large speculations in Bitcoin; Elon Musk, who manages his own cryptocurrency Dogecoin. They say the Treasury market needs more demand (to absorb the shocking $2 trillion-plus/year in new U.S. debt); and that mysteriously minted cryptocurrencies, with big hedge funds, will supply that demand, which is waning from foreign sovereigns and major banks, and keep the U.S. dollar totally dominant, etc.
Bloomberg News Jan. 24 reported Trump’s order, and quoted the CEO of Tether, Paolo Ardoino: “Having new buyers and such a diverse, decentralized user base for purchasing and holding T-bills is going to be very, very important to the future of the U.S. economy.”
