In the past few years, Donald Trump has changed his mind about cryptocurrency. He’s gone from believing it was “based on thin air” to wanting the U.S. to become the “crypto capital of the world.” Atlantic staff writer Annie Lowrey breaks down how the president’s reversal of opinion about this notoriously volatile industry could destabilize the U.S. financial system—and lead to a crypto-induced economic crisis. Get more from your favorite Atlantic voices when you subscribe. You’ll enjoy unlimited access to Pulitzer-winning journalism, from clear-eyed analysis and insight on breaking news to fascinating explorations of our world. Subscribe today at TheAtlantic.com/podsub. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Why did Donald Trump change his stance on cryptocurrency?
Trump has become very pro-crypto, pushing to change regulations and create a world where crypto plays a much bigger role in Wall Street and in Washington. all while he and his family stand to profit from crypto investments of their own. I'm Hannah Rosen, and this week on Radio Atlantic, crypto in the new Trump era.
With so many high-stakes changes coming from the administration, it's easy to push the crypto story aside.
There's just so many things going on right now, and people are so excited about some things and so upset by other things.
Chapter 2: What are the risks associated with Trump's pro-crypto policies?
That's Atlantic staff writer Annie Lowry, who writes about the economy and politics. And she's here to tell us why we shouldn't lose sight of this one. Because what Trump is proposing could have real risks for all of us. And the people who are paying the most attention are the ones pushing for it to happen.
Crypto legislation is only the number one most salient priority for crypto people. So the people that members of Congress are going to hear from are the crypto people.
So let me just start basic. What was the initial idea of cryptocurrency and how did it evolve over time?
Cryptocurrency initially started as basically a way to create a financial structure outside of governments and outside of the banking system.
Bitcoin is disruption. It's disruption on a scale that most people haven't even begun to imagine.
In the world of libertarian high techies, skepticism about government issued paper money abounds.
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Chapter 3: How does cryptocurrency work and what are its origins?
If enough people use Bitcoin, it could help bring down the dollar. You think that's a real possibility?
It was really, really outsidery. It was kind of utopian.
Radical disruption.
Completely decentralized money with no borders.
Every industry in the world is going to be affected, and it's going to be a beautiful, beautiful thing.
It was very, very techie. And from the very outset, it was simultaneously a currency. Right. So supposed to be a store of value and investment, perhaps something that you could put money in and get more money back later.
And also a financial technology that would allow people to transfer money between each other without having to go through the kind of financial conduits that are controlled by governments and banks.
For the first time now in human history, people everywhere can trust each other and transact peer to peer.
So a certain level of anonymity and privacy that you wouldn't necessarily have, you know, Uncle Sam looking over your shoulder. And again, just something that was outside the aegis of the system that a lot of early crypto adopters really felt was suspect. Something that could be, you know, universal, global.
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Chapter 4: What does the future hold for cryptocurrency regulation?
He became a millionaire at 24, all by investing in Bitcoins.
But we say it's a speculative asset. It's a price that is unusual in the sense that it's completely untethered. So when we think about investments in general, so a stock, right? If I'm going to buy a share of a stock, I'm not just getting the value of the stock itself. I'm getting the money that that company is going to remit to shareholders.
The value of the stock and the amount of money that's going to get remitted to shareholders is based on the company's core financials, what they're buying and selling. Bitcoin is different in the sense that there's nothing underneath at all. There's no way in which it's generating and throwing off cash over time. And there's literally nothing there. It's like a lottery ticket.
Even something like gold, which is a really speculative asset in the same way, gold itself does have, like, industrial uses. There are things you can do with gold. Right. You know, there's really almost nothing like it. You know, even Beanie Babies or Tulip Bulbs, right? You have the Beanie Baby. You have the Tulip Bulb. Here, it's like nothing. It's a bunch of numbers. That's it. Right, right.
And what's the significance of that? Like, I know it sounds weird and alarming and virtual, but why is that an important thing to think about? Because money is also nothing. It's just like a thing that we've all agreed is worth a certain thing that can be traded for other things. So why does it matter that there is no there there with Bitcoin? Yeah.
It means that the price is purely speculative and completely and only based, literally only solely based, on interest in the asset. So imagine that everybody decides, no more Bitcoin. We're all moving to Ether. or another cryptocurrency. There's nothing underlying the value of Bitcoin. If Bitcoin had some beating heart of an investment, right?
Like it was an apartment building where you could rent the apartments out. It was a farm where you could eat or sell the apples. Any of a million other things I could think of, there would still be some base value to it. And the thing with crypto is that there's nothing. And so you'll see these smaller cryptocurrencies just completely crash and burn.
And so it means that they're much more volatile. And it also means that they're harder to assess the value of because there's no underlying value. It's just literally a bet on who's going to want it at what price.
Okay. I think I'm starting to understand in your voice, you haven't said this yet, but I think what I'm starting to understand is it's the volatility probably makes everything more risky and people involved in it more vulnerable and makes it more vulnerable to manipulation.
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Chapter 5: How could Trump's actions affect taxpayers and the economy?
One thing that I've also written about is that, you know, in 2021 and 2022, you had a lot of targeted advertising in Black communities, which were slow to adopt crypto, kind of late to get in. But there was a ton of advertisement basically, you know, kind of making this argument to Black folks who might have been kind of skeptical investors about
that this was their chance outside of these stodgy U.S. financial companies that had redlined them and hadn't treated them fairly, that this was their big opportunity. And because there's such great racial wealth disparities in this country, I think that This was a very kind of attractive case.
And a lot of black folks bought in when the bubble was about to burst, right, when the bubble was getting blown up. And then, you know, they bought in when crypto was really expensive and then they saw the price of their investment crater.
So into this boom bust world of incredible volatility walks Donald Trump. What does his return to office mean for crypto?
So Donald Trump had been a crypto hater for a long time.
He was like, I don't like it. Trump tweeted yesterday, quote, I am not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile and based on thin air. He's a real estate guy, right? These are real assets.
Tangible, touchable assets.
And my sense of what happened by talking to people in this industry is that crypto folks began flattering Donald Trump and they started sending him a ton of money and they started setting up business ventures with his family members, with his sons. And all of a sudden he became wildly pro-crypto, probably more than any but just a couple handful of members of Congress.
The energy and passion of the crypto community is the kind of spirit that built our country. And it is exciting to watch as you invent the future of finance.
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Chapter 6: What lessons can be learned from the volatility of crypto markets?
And so when these really volatile assets crash, you can have a lot of kind of personal pain. A lot of people can personally get scammed. They can lose a lot of money. But there isn't broad public risk. Donald Trump is planning on doing a few things. So first, he's planning on cutting financial regulations for all financial businesses, so deregulating.
He's reducing financial regulatory enforcement through the SEC and the other alphabet soup agencies that do that in the United States. He's thinking about creating a crypto reserve, so using public assets to purchase Bitcoin, Ether, probably some other currencies. And then he's promised to sign a bill that would change the regulatory status of crypto, among other things.
At the same time, it's also worth noting that his family and he are kind of in the crypto business now. They started or were staked in a company called World Liberty Financial. which sells tokens. His older sons recently invested in a mining operation.
And before the inauguration, they launched a meme coin, a Trump meme coin, which created earned value, but appears to have made his family and their partners a lot of money just from skimming from the transactions. And so all of these things are happening at once. And the thing that I fear is
is that you could end up with less price volatility because you have this kind of stable government investment and this government interest, now a public interest in stable crypto prices, but you're socializing risk. It could be the taxpayer that's called on to bail out crypto businesses, the taxpayer that's putting you know, public resources on the line.
And I worry that Donald Trump is taking risk away from crypto investors, particularly big crypto magnets, and is putting it on the American taxpayer, on the citizen, in a way that, you know, I don't know that the taxpayer or the citizen is going to have those benefits redound to them.
OK, that was a lot. Let me let me make sure I understand that. So before crypto is in a separate world and whoever invested in it just took on the risk themselves. It wasn't integrated in the American economy in any particular way. And was it heavily regulated? Is that one of the things Trump is changing?
So crypto was interesting, and this is all really technical. Basically, there had been an argument from the crypto industry that crypto assets were different than the assets that were regulated by financial regulators like the CFTC and the SEC. Basically, that crypto needed its own legislation. American financial regulators, by and large, rejected this argument.
And so Gary Gensler, the former head of the SEC, basically said, almost all crypto assets are securities, and securities are regulated by me here at the Securities and Exchange Commission. And we don't need new legislation. We need all of you to comply with securities laws, which are quite strict.
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Chapter 7: Why is public perception of cryptocurrency important?
And I think to give the crypto industry some benefit of the doubt on this, there were some questions about, like, okay, is this a commodity or a security? Who should regulate? How does this rule exactly apply for a bunch of really technical reasons? But that was the world that we're in. And from my perspective, it worked fine. Yeah.
Right.
You know, there were lots of crypto companies in the United States. You know, the financial system was mostly protected from this quite scammy, quite volatile industry. But the industry didn't like it, in part because Main Street and Wall Street banks declined to do a lot of business with crypto firms because of questions about how they would be regulated.
If they did that, would it be safe for them? Would they get into trouble with their regulators? And that's really one of the things that's changing now that we're on the precipice of pro crypto legislation coming out that I think is going to dramatically increase risk in the American financial system.
When we're back, what does a crypto doomsday scenario look like? And how worried do we really need to be?
I'm Carla Lally Music, cookbook author and curable food lover and the host of Sweets Unwrapped, a new podcast from Ferrero and Atlantic Rethink, the Atlantic's creative marketing studio. Have you ever wondered where the hazelnuts and Nutella come from or how Keebler has stuck around for over a century?
Whether you've got a sweet tooth or curious about flavor science or want to know what's next in the world of R&D, tune in to Sweets Unwrapped wherever you get your podcasts.
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