The elections are over and Trump is now president again. He accomplished something that hasn’t been done since Grover Cleveland in the 19th century: a successful re-election after losing his first term. People around the world are celebrating this as some kind of victory for Bitcoin, but nothing could be further from the truth.
Ross will probably be released, Trump is too full of himself to back out of such a trivial campaign promise, so he will probably do it. It’s too easy, and something he can parade around and take credit for, so it will happen.
That’s where anything substantial will end up. A strategic reserve does not occur without the approval of Congress; even seized assets must be sold on the open market by law. Trump cannot, on any reading of his authority, which I know is unilaterally pushing the federal government to start accumulating bitcoin. Even if, by some miracle, Congress were to act to pass such legislation, what good would it do for Bitcoin? A government hoarding bitcoin will not make it more scalable, it will not make it more private, it will not protect it from government overreach and interference. It won’t even help us pay off our debts; the price increase required for such an outcome is downright misleading.
Instead, the most likely outcome is more of the same. More attacks on Bitcoin privacy. More encroaching regulations in the form of KYC and AML. Miners are likely to come under scrutiny as Bitcoin’s rise on the global political stage continues. The question of their liability and involvement in confirming sanctioned or otherwise undesirable transactions has been floating around Washington DC for a few years, the tone of those questions is likely to become more serious.
Exchanges and other on-ramps will likely be pressured to conduct increasingly invasive surveillance of their users in their quest to eradicate terrorism, criminal use, child trafficking, etc. All the traditional boogiemen of the digital world will be weeded out, and the regulatory noose will be tightened. Sure, Trump could push for enshrining self-determination as a right, but does that in and of itself really offer any serious degree of freedom without privacy? Without censorship resistance?
Trump even spoke in Nashville about regulations and the expansion and adoption of stablecoins. “People who see Bitcoin as a threat to the dollar have it exactly the other way around.” He wants to spread dollar-backed stablecoins around the world and take advantage of a new route that allows us to export our inflation without the need for diplomacy. People in other countries can simply use them, they do not need their government to opt for dollarization or maintaining dollar reserves. Just download an app and start using it. The approach he wants to take towards Bitcoin and cryptocurrencies will revive the dollar and push Bitcoin on a path to stagnation and conquest.
People are cheering this as a win for Bitcoin, the reality is we are walking into the gauntlet. It is still an open question whether we can pull this off successfully and come out the other side without having to make serious and potentially fatal compromises.