Trump’s ‘America-First’ Crypto Move: A Game Changer or a Bad Idea?

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What to know:

  • Solana’s SOL and Ripple‘s XRP surged Thursday after a report suggested Trump might back a strategic reserve of “America-first” cryptocurrencies.
  • The initiative is a “bad idea” and the government shouldn’t make venture capital-style investments in altcoins, Lekker Capital’s Quinn Thompson said.
  • “Nationalizing” digital assets could weaken efforts of blockchain decentralization, Innovating Capital’s Anthony Georgiades said in a CoinDesk interview.

Has there been significant talk about a strategic Bitcoin reserve leading up to Donald Trump’s inauguration? But what about other digital currencies or cryptocurrencies that might be on the new 47th president’s agenda?

On Thursdays, Solana’s SOL, Ripple’s XRP, and Hedera’s HBAR are among the altcoins performing particularly well. This upward trend is partly due to a report in the New York Post suggesting that former President Trump showed interest in establishing a strategic reserve of tokens such as SOL, XRP, and Circle’s USDC stablecoin, which we could call an “America-first digital asset reserve.

The price of SOL surged over 8% to $217 after the report was released, while XRP reached $3.35 this week, slightly below its highest price in 2018, according to CoinGecko data. The token HBAR, associated with the Hedera Hashgraph network founded by a Texas-based company that uses pseudonyms, didn’t get mentioned in the story, but it rose more than 10% to its highest price since early December.

Over the last day, the CoinDesk 20 Index has experienced a significant increase of 5%, surpassing Bitcoin’s modest growth of 0.5%, which stopped slightly short of reaching $100,000.

Excitement among cryptocurrency investors is growing as Trump’s inauguration approaches next week, with speculation mounting over potential executive orders focusing on the digital asset industry on his first day in office. During his campaign, Trump pledged to make the U.S. a frontrunner in the crypto sphere and even suggested creating a national stockpile of bitcoin. Senator Cynthia Lummis introduced the BITCOIN Act in July, proposing that the government acquire 5% of all bitcoins in existence. Furthermore, some U.S. states are exploring or have already proposed legislation to establish reserves for digital assets.

Not so fast

Some token owners may eagerly anticipate the possibility of governments purchasing cryptocurrencies beyond Bitcoin, but market analysts have expressed apprehensions about this scenario.

According to Quinn Thompson, the founder of hedge fund Lekker Capital, this proposal is extremely unlikely and may not come to fruition.

Thompson explained to CoinDesk that it’s inappropriate for the government to invest in altcoins like venture capital. He also mentioned that the speculation about a strategic reserve for altcoins, other than Bitcoin, is another instance of an unwise idea being accepted as truth without proper verification.

According to Anthony Georgiades, the investment partner at Innovating Capital, it’s great to encourage US-led innovation. However, he cautions that the possible takeover of digital assets by a single nation might undermine attempts to create a decentralized economy in blockchain networks.

In an interview, he stated that currently, Bitcoin is the only cryptocurrency that is completely and exclusively decentralized. Other projects may have the potential to reach this level of decentralization in the future, but the centralization of digital assets could gradually undermine these efforts if they continue down the path of nationalization.

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2025-01-16 20:22