Why the Backlash?
Several tech and crypto leaders are questioning the plan. Here’s why:
- Taxpayer Money: Critics argue that using taxpayer funds to support speculative digital assets is risky.
- Obscure Tokens: The inclusion of Solana, XRP, and Cardano raises questions. These tokens are less widely accepted and some believe they were chosen due to personal ties within Trump’s administration.
- Lack of Details: The announcement was vague, leaving investors uncertain about how the reserve would work.
The backlash isn’t limited to crypto skeptics. Even pro-crypto voices have criticized the plan. Joe Lonsdale, a tech entrepreneur, tweeted that it was wrong to tax people for what he called “crypto bro schemes.” Michael Bentley, CEO of Euler Labs, called the reserve a “massive fumble.”
Bitcoin Bailout?
The proposal has drawn comparisons to a government bailout. Bitcoin and other crypto assets had a rough February, with Bitcoin falling 18% — its worst drop since the 2022 crypto winter. Many fear that the reserve would artificially inflate crypto prices without solving any underlying issues.
Hilary Allen, a law professor and crypto skeptic, pointed out a key issue. Oil reserves make sense because oil is useful and scarce. Crypto, on the other hand, has no inherent value. Its price depends solely on supply and demand.
If the government were to sell its crypto holdings, prices would likely crash. This could benefit existing holders while leaving taxpayers with the losses.
Conflicts of Interest?
David Sacks, Trump’s crypto czar, has also come under scrutiny. Sacks has previously invested in Solana and other cryptocurrencies. He denied having any current holdings and promised to update the public after completing the ethics process.
However, questions remain:
- Did Sacks sell his holdings before joining the administration?
- Has he completed the required financial disclosures?
- Is he still involved with Craft Ventures, a firm with stakes in crypto companies?
What’s Next?
Whether Trump’s proposal will move forward remains to be seen. A lack of transparency and mounting criticism risks the project being murdered. Crypto markets continue to be volatile in the meantime as investors weigh up the possible pros and cons.
The coming weeks will reveal whether the Crypto Strategic Reserve is a serious policy or just another political move. For now, the backlash shows that even in a more crypto-friendly environment, not every proposal will get a warm welcome.
