For a man as verbose as US President Donald Trump, the former real estate developer and reality television star has had little to say about bitcoin. However, there are a growing number of reasons to expect that when Trump finally does address the subject of cryptocurrency, it won’t be to praise the innovative nature of this technology and nascent asset class but rather to call for its imminent demise.
For the latest red flag, look no further than the president’s second State of the Union address. No, Trump didn’t call out bitcoin for its perceived — and inaccurate — reputation as a tool for money laundering and terrorism financing, but he did devote significant attention to Iran, a US geopolitical foe who reportedly wants to use crypto technology to accomplish at least one of those illicit goals.
Speaking on Tuesday evening, Trump devoted several paragraphs to reaffirming his administration’s hostility toward the “radical regime in Iran,” which he lambasted as the “world’s leading state sponsor of terror.”
“My administration has acted decisively to confront the world’s leading state sponsor of terror — the radical regime in Iran. It is a radical regime. They do bad, bad things. To ensure this corrupt dictatorship never acquires nuclear weapons, I withdrew the United States from the disastrous Iran Nuclear Deal.”
“And last fall, we put in place the toughest sanctions ever imposed on a country. We will not avert our eyes from a regime that chants death to America and threatens genocide against the Jewish people. We must never ignore the vile poison of anti-Semitism, or those who spread its venomous creed. With one voice, we must confront this hatred anywhere and everywhere it occurs.”
Accusing the regime of promoting “the vile poison of anti-Semitism,” Trump further equated Iran’s government to the perpetrators of the Holocaust, as well as the domestic terrorist who murdered 11 people last October at the Tree of Life synagogue in Pittsburgh.
But while Trump congratulated his administration for subjecting Iran to the “toughest sanctions ever imposed on a country,” Iran’s government is actively pursuing methods that could allow it to circumvent those economic restrictions. The rogue nation’s tool of choice? Cryptocurrency.
As CCN.com reported, Iran’s government plans to release a state-managed crypto token. Tentatively dubbed the “crypto-rial,” the token will purportedly be backed by Iran’s fiat currency, making it a sort of “stablecoin” (although the value of the rial has been anything but stable).
At first, Iran plans to distribute the token to financial institutions who will use it to enhance the speed of interbank transactions now that they have been barred from international payments network SWIFT. Assuming this goes well, Iran may issue it to the public for broad use as a medium for digital payments.
Concurrently, four Iranian banks have developed a gold-backed cryptocurrency called “PayMon” that they hope could assist the crypto-rial in mitigating the damage from the SWIFT blockade.
If and when those cryptocurrencies enter the Iranian economy, one expects that the United States will take steps to prevent the digital tokens from exiting the country’s physical borders.
Trump already signed an executive order last year taking the extraordinary step of prohibiting US citizens and residents from purchasing or even interacting with the petro, the supposedly oil-backed cryptocurrency launched by Venezuela’s government at the behest of Nicolas Maduro.
From the executive order, which was the first in US history to mention cryptocurrency explicitly:
“All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.”
Venezuela, like Iran, developed its state-backed cryptocurrency as a way to evade the crippling economic sanctions the US and its allies had imposed on it. Though likely meant primarily as a tool to prop up Venezuela’s flailing economy, Maduro also bribed India and other trade partners with discount oil if they would agree to pay with petros, which they reportedly did not.
There’s also the looming specter of Russia and its crypto-ruble.
Though critics allege that Trump may be a Putin puppet, his administration has nevertheless dealt with Russia with comparable hostility to previous Republican governments, and US sanctions remain an ever-present threat to the Russian economy.
Concerned about the potential for increased sanctions, Moscow has discussed launching a cryptocurrency for several years, and Duma officials have said that the government could issue a token within two to three years.
There have also been rumors that Russia could adopt bitcoin outright, though state officials have thrown cold water on those claims.
Together with the petro and crypto-rial, the crypto-ruble would complete an unholy trinity of state-backed cryptocurrency projects explicitly designed to undermine the United States’ international policy goals.
For someone who is likely unacquainted with the finer points of blockchain technology and its positive use cases, it would be understandable if these three cryptocurrency projects soured Donald Trump on the asset class altogether.
Still, Trump has surrounded himself with a surprising number of advisers who are on record praising bitcoin and even — in the case of 2016 campaign guru Steve Bannon — initial coin offerings. Like most Republican presidential administrations, the Trump White House has also been hesitant to expand the regulatory state.
However, we don’t know what — if anything — Trump’s advisers are telling him about bitcoin now that we are well past the bubble pop and many onetime bulls have grown more sheepish about the utility of and outlook for this once-booming asset class.
Moreover, we all know Trump loves television, and unfortunately, it’s cryptocurrency-related stories like the ongoing QudrigaCX fiasco that make the nightly news. If Trump’s daily boob tube binge has influenced his thinking on bitcoin, it’s unlikely that those newscasts have left him with a positive impression.
Finally, borderless cryptocurrency doesn’t quite mesh with Trump’s America-first policy outlook. Even if his administration has generally favored deregulation, it’s hard to see Trump cheering the advent of a future in which bitcoin or another public cryptocurrency rivals the US dollar as the world’s reserve currency.
If Trump believes — rightly or wrongly — that the crypto-rial and other similar state-backed digital tokens present a national security threat, it’s unfortunately simple enough to conceive that he would sign an executive order that enacts sweeping restrictions on broader cryptocurrency usage as well.
At the very least, he could pressure executive branch agencies such as the Securities and Exchange Commission — which continues to review bitcoin ETF proposals — to treat cryptocurrency companies with more scrutiny and hostility, potentially stunting bitcoin’s growth as a financial instrument, at least in the US.
So while crypto enthusiasts might revel in the vindication that would come from the president praising bitcoin from the Oval Office — or at least on his personal Twitter account — perhaps the best-case scenario is one in which Trump continues to say nothing at all.
Donald Trump Image from Shutterstock
Last modified: May 20, 2020 12:39 PM UTC