Trump's crypto 'sea change' upends Washington's finances

President Donald Trump claims not to email or text and has been impressed that "everything is computer" inside a Tesla. But for all of his Luddite tendencies, there's one field of technology he has embraced since his return to the White House: cryptocurrency. Trump has positioned his administration as a champion of the digital currency industry, and his adoption of crypto is also widely believed to be an avenue for personal enrichment.

'Eviscerating' financial boundaries

The "winds are shifting" at the Securities and Exchange Commission under Trump as the agency moves toward a "more structured, innovation-friendly approach to digital assets," said Forbes. At the same time, the president's personal and familial involvement in the crypto field — including the launch and sale of his eponymous $TRUMP memecoin — has "intensified scrutiny" of the agency's "independence." In particular, Trump's recently unveiled World Liberty Financial, a firm "largely owned by a Trump family corporate entity," is "eviscerating the boundary between private enterprise and government policy," said The New York Times. As "not only a major crypto dealer," Trump is also the "industry's top policymaker" who has "leveraged" his position in office in "ways that have benefited the industry and in some cases his own company."

The impact of Trump's crypto participation extends beyond his personal wealth. In the past, there may have been Democratic lawmakers "sort of amenable to supporting" crypto-favorable legislation, said Duke University lecturing fellow on economics Lee Reiners to The Hill. However, they are now "getting a bit skittish" over Trump's "blatant" mixing of "financial interest with his political power."

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A 'sea change' or a 'crypto winter'?

Trump's crypto focus and his efforts to roll back some of the restrictions imposed during his predecessor's administration have "unleashed a flurry of crypto deals" by companies "seeking to capitalize on lighter U.S. regulation," said The Wall Street Journal. There is "genuine interest" in the market for "taking advantage of this regulatory moment," said Ryne Miller, the co-chair of the crypto practice at law firm Lowenstein Sandler, to the Journal.

At the same time, the Trump administration's crypto focus means that assets with "high price volatility" could pose risks "not only for investors but also potentially for financial stability" as a whole, said the Bank of Italy in a report published Tuesday. The risk is particularly acute given the "growing interconnections between the digital asset ecosystem, the traditional financial sector and the real economy," the Bank's report said.

The report is "one of the first to have been published since Trump's imposition of global tariffs unleashed market turmoil," said Bloomberg. The "extreme negative sentiment" surrounding Trump's existing tariffs and future escalations is one of the "converging signals" suggesting an upcoming "new 'crypto winter,'" said industry leader Coinbase in its April monthly outlook.

In Washington, however, Trump continues to push the loosening of crypto regulations and his own crypto investments, signaling a "total sea change" from just months ago, said crypto investment firm Castle Island Ventures founding partner Nic Carter to The Hill. Doomsaying predictions of global crypto collapse are just the work of "short-term folks in the industry that can't see the forest for the trees."