The establishment by the Federal government of a fund to invest in crypto assets is a terrible idea. First the US has no surpluses to invest. It would need to borrow the money to invest. While the fund might be stocked to some extend with confiscated bitcoin and other digital assets “The use of seized cryptocurrencies, however, could run into roadblocks as these assets often go back to the victims of financial crimes” “The Hill” Second it is a terrible precedent for the government to support and manipulate the private market for private assets. Third crypto assets yield no benefit to the American economy. They do not represent or fund investments in productive capital in our economy. They are simply a toy for those who like to gamble.
Crypto assets should not be confused with technical improvements in payment technology (improvements in the speed, efficiency, and/or cost of making payments with “real” money). Such improvements are welcomed.
Trump posted to Truth Social that: “A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA.” Trump had previously dismissed crypto as a scam. “The Hill–Trump announces US crypto reserve”
Author: Warren Coats
I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy. I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989. After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017. Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75. I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise. In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.” My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon. I live in National Landing Va 22202
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