Tangle - Trump's federal cryptocurrency reserve.

Episode Date: March 4, 2025

On Sunday, President Donald Trump namedfive digital assets — Bitcoin, Ether, XRP, Solana, and Cardano — that will make up a “Crypto Strategic Reserve” for the United States. The announcement follows Trump’s January 23 executive orderestablishing the Working Group on Digital Asset Markets, which is tasked with evaluating the creation of a strategic stockpile of national digital assets. Ad-free podcasts are here!Many listeners have been asking for an ad-free version of this podcast that they could subscribe to — and we finally launched it. You can go to ReadTangle.com to sign up!You can read today's podcast⁠ ⁠⁠here⁠⁠⁠, our “Under the Radar” story ⁠here and today’s “Have a nice day” story ⁠here⁠.Take the survey: What do you think of establishing a U.S. cryptocurrency reserve? Let us know!You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here. Our Executive Editor and Founder is Isaac Saul. Our Executive Producer is Jon Lall.This podcast was written by Isaac Saul and edited and engineered by Dewey Thomas. Music for the podcast was produced by Diet 75.Our newsletter is edited by Managing Editor Ari Weitzman, Senior Editor Will Kaback, Hunter Casperson, Kendall White, Bailey Saul, and Audrey Moorehead. Our logo was created by Magdalena Bokowa, Head of Partnerships and Socials.  Hosted on Acast. See acast.com/privacy for more information.

From executive producer, Isaac Saul, this is Tangle. Good morning, good afternoon and good evening and welcome to the Tangle podcast, the place you get views from across the political spectrum, some independent thinking and a little bit of my take. I'm your host, Isaac Saul. And on today's episode, we're going to be talking about the announcement of a crypto reserve that was made by President Donald Trump on Sunday. Going to break down exactly what we know about it, which is not a ton yet, and then share some opinions and reactions from across the political spectrum.

And then of course, my take. So with that, I'm going to send it over to our producer, John Lull, to break down today's main story. And I'll be back for my take. Thanks Isaac. And welcome everybody. Here are your quick hits for today. First up, president Donald Trump ordered a pause on shipments of U.S. military aid to

Ukraine following last week's Oval Office meeting with Ukrainian President Volodymyr Zelenskyy. The White House said it is pausing and reviewing our aid to ensure that it is contributing to a solution. Number two, President Trump will address a joint session of Congress on Tuesday night, the first such address of his second term. The President reportedly plans to highlight his efforts to reduce the size and scope of the federal government in his speech.

The Senate confirmed Linda McMahon as Secretary of Education in a 51-45 vote. The National Science Foundation said that it is reinstating dozens of probationary employees fired by the Trump administration after a federal judge ruled that the Office of Personnel Management must rescind its directives to several federal agencies to fire probationary employees. President Trump and Taiwan's semiconductor manufacturing company announced that the company plans to invest at least $100 billion more in chip factories in the United States over the next several years. We are learning more at this hour of President Donald Trump and the creation of a strategic

crypto reserve. And I do want to put up this post on Truth Social of this latest from Truth Social from the president saying a US 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 crypto strategic reserve, including some very key crypto currencies. I will make sure the U.S. is the crypto capital of the world.

On Sunday, President Donald Trump named five digital assets, Bitcoin, Ether, XRP, Solana, and Cardano that will make up a crypto-strategic reserve for the United States. The announcement follows Trump's January 23rd executive order establishing the Working Group on Digital Asset Markets, which is tasked with evaluating the creation of a strategic stockpile of national digital assets. For some context, cryptocurrencies refer to digital assets exchanged through records maintained by a decentralized system authenticated by cryptography.

Bitcoin and Ether are the world's largest cryptocurrencies by market capitalization. XRP, Solana, and Cardano are cryptocurrencies with specialized functions. XRP focuses on fast and inexpensive payments across borders. Solana focuses on quick transactions involving decentralized applications and digital collectibles. And Cardano focuses on crypto contracts, called smart contracts, with an emphasis on sustainability. President Trump embraced the crypto industry during the 2024 campaign, promising to make the United States the crypto capital of the planet and the Bitcoin superpower of the world if elected.

On January 23, Trump signed an executive order stating the digital asset industry plays a crucial role in innovation and economic development in the United States and calling for the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy. Shortly before his inauguration, Trump launched his own cryptocurrency, Dollar Sign Trump, and the Trump family also announced a crypto venture last year. Bitcoin, Ether, XRP, Solana, and Cardano rose in value following the announcement, with Bitcoin and Ether increasing

19% and 13% respectively over the weekend. The surge follows weeks of stagnation or declines for many digital currencies. However, the currencies fell on Monday and analysts expect further market movement on Friday when the White House will host its first cryptocurrency summit. While the President's support for cryptocurrency has been a boon for the industry, many lawmakers have expressed concern about the U.S. government championing a space with regular instances of fraud and abuse, as well as the potential for conflicts of interest. In particular, Trump named investor and podcaster David Sachs the White House AI and crypto czar. Sachs is a

longtime crypto investor who could stand to benefit from the creation of a crypto strategic reserve. Today, we'll share perspectives from the left and the right on the Trump administration's crypto policy, and then Isaac's tape. We'll be right back after this quick break. Alright first up let's start with some agreement. Commenters from the left and the right are skeptical of the idea and agree that a cryptocurrency reserve would carry a great deal of risk. Alright let's move on to what the left is saying.

The left opposes Trump's plan for the crypto reserve, with many saying it will create blatant conflicts of interest. Some suggest the administration's embrace of crypto mirrors its contradictory stances on a host of issues. Others say Trump is already facilitating corruption. In no opinion, Noah Smith argued a sovereign crypto fund is a new way to pay out regime cronies. Trump wants to have the U.S. federal government buy large amounts of a few specific cryptocurrencies.

This will require either raising taxes on the American people or making the U.S. government go deeper into debt at a time when interest payments are already spiraling out of control," Smith wrote. As Elon Musk says, the debt must eventually be paid with either future taxes or future inflation or wiped out in a sovereign default that causes a horrific economic collapse. So Trump wants to take your hard-earned money and give it to whoever owns Ripple, Solana, and Cardano. Who stands to gain?

Well, that's the first reason crypto is such an ingenious tool for regimes to send money to favored individuals. Crypto holdings are anonymous. The public doesn't even know who has a bunch of XRP, SOL, and ADA. But if you have a bunch of one or more of these coins, you can go whisper in Trump's ear, hey man, I own a ton of Cardano, Smith said. And if you're someone Trump wants to pay out, he can just include Cardano in his list of cryptocurrencies

that he wants the US government to buy. Everyone knows that someone got a big payday, but no one knows who, except for the parties involved. Regime crypto payouts are inherently secret, even when done in plain sight. In Bloomberg, Joe Weisenthal and Tracy Allouay asked, what is the real crypto industry? Will the government be spending money to build a crypto equivalent of Fort Knox that includes random coins like XRP?

Will the government just be consolidating the various coins that it seized from criminals into one unified account? Will anything happen at all beyond a truth social post in an executive order? We really don't know," Weisenthal and Allouay said. Probably the most notable thing here, though, is that the President of the United States is now tossing out specific tickers. Plenty of people have already pointed out the tension, or hypocrisy, between the U.S. government starting a strategic reserve for something whose selling point has, to date, been all about disintermediating the

government," Weisendahl and Allouay wrote. The tension is real, but it's also not really the point. Crypto and especially Bitcoin is an industry that thrives on contradictions. Crypto's ability to contain multitudes, even contradictory ones, is a feature, not a bug, and it's no surprise that the industry has been thriving at a time when there are big narrative shifts and proliferating, sometimes paradoxical, stories. In the new republic, Malcolm Ferguson called the reserve open corruption. Trump announced his plans for a U.S. crypto strategic reserve, stating that he'd be making

the country the crypto capital of the world. But a closer look reveals the reserve may be nothing but a blatant insider trading scam to make his billionaire crypto czar richer, funded by taxpayer money, Ferguson said. Trump announced that he plans to add five cryptocurrencies to the strategic reserve — Bitcoin, Ethereum, XRP, Solana, and Cardano. Not so coincidentally, his crypto czar, David Sachs, has a venture firm linked to Bitwise Invests, one of the biggest crypto index fund providers. Bitwise holds significant amounts of the very same cryptocurrencies. Sachs promised that he sold his personal direct holdings,

but made no mention of his multiple indirect holdings, Ferguson wrote. If this wasn't enough, just a few hours before Trump's announcement, someone bought $200 million in Ethereum and Bitcoin, raising the question of who may have known about the plan ahead of time. Alright, that is it for what the left is saying, which brings us to what the right is saying. The right is mostly critical of the proposal, arguing that it undermines President Trump's economic plan. Some say the reserve makes sense on paper, but undermines the purpose of cryptocurrencies.

Others worry about the message the reserve will send to the rest of the world. In his newsletter, The Pomp Letter, Anthony Pompuliano wrote, what I think about the crypto strategic reserve. Instead of the United States creating a reserve of hard money, which has strategic importance due to its finite supply, the relationship with low cost energy and the backing

of the strongest computer network in the world, we seem to be getting into a random smattering of speculative tools that will enrich the insiders and creators of these coins at the expense of the U.S. taxpayer," Pompliano said. The United States is not in the business of buying stocks and other investment assets. Maybe the soon-to-be-formed sovereign wealth fund will do that, but there is no precedent for the government to play capital allocator in this way. If the United States is willing to put these tokens on their balance sheet, we should also be willing to put stock from Amazon, Facebook, Tesla, Palantir, and GameStop.

If we are speculating on capital appreciation, we can even add LP interest in Blackstone, Citadel, Millennium, Tiger Global, Sequoia, Andreessen Horowitz, and your favorite real estate or private credit fund," Pompeliano wrote. We obviously wouldn't put those stocks or funds on the country's balance sheet, so we shouldn't put these altcoins on the balance sheet either. There's nothing strategic about ETH, SOL, XRP, or ADA. In The Spectator, Matthew Lynn explored the fatal flaws in Trump's crypto reserve plan.

Sure, it is possible to make an argument for a crypto reserve. If governments hold gold plus foreign exchange reserves, and most have always done so, then it makes sense to hold some digital currencies as well. And in fairness, it will help give some official approval to what is clearly an important asset. Who knows? If they carry on going up in price, the government might even make some money, Lin said. The trouble is, there are three big problems with Trump's plan. Most importantly, there is no need for a crypto reserve. The entire point of such currencies is that they are free of government intervention.

Trump's plan will also be very expensive. The American president has not said how much will be spent on the reserve, but one Republican-backed bill in the Senate suggests buying $94 billion of Bitcoin based on current prices. We all understand that Elon Musk is going to cut a lot of waste, but it is hard to know where all that money is going to come from given that the US is already running a deficit of almost 6% of GDP," Lin wrote. A crypto reserve may give a few traders a bump and allow for smart investors to make a lot of money. But the blunt truth is this.

It is pointless and expensive, and it is only going to end badly. In the New York Post, Charles Gasparino said, the US government's stockpiling crypto would send an awful message to the world. By stockpiling Bitcoin, the most popular crypto, inside the vaults of a place like Fort Knox, the US government is sending a message to the world. An alternative asset is as safe as the US dollar, Gasparino wrote. That's the word I'm getting from some smart market types, who I might add believe in crypto, want to see advances in its blockchain technology to make transactions cheaper and more efficient, but also see how Trump and his people are playing with fire on this one.

We are literally undermining global allegiance to Kingdollar. When the US government gives its stamp of approval for a digital coin, it's signaling to the world to think twice about investing in US dollar-denominated assets like our debt because crypto is the new thing. It's a terrible message," Gasparino said. For starters, we are still living in a country addicted to debt that we need foreigners to buy and they are willing to do so for many reasons, including that the US is a great safe haven with a stable reserve currency. As such, we want the dollar to remain as the world's reserve currency for the simple reason

that we will be selling more debt even under Trump. All right, let's head over to Isaac for his take. All right, that is it for the left and the right are saying, which brings us to my take. So in 2014, I was a reporter living paycheck to paycheck in Harlem grinding on the politics beat and basically just waiting for my big break. One night, a friend of mine from college was talking my ear off about this new kind of digital currency. He told me how it was going to change the world and my life.

He explained how it would be used for government contracts and instant payments with an unimpeachable line of custody and how it could also be held as an asset. I had heard of cryptocurrency, of course, like Bitcoin, but this was different. It was called Ethereum, the kind of Bitcoin 2.0 that was the real future of the game, he said. Given how tight I was on money, I refused to invest, so he made me an offer. He'd buy me $1,000 of Ethereum if I promised to take him

on a trip to Europe if my holdings ever multiplied by 10. I felt uncomfortable and resisted. At the time, the cost of Ethereum was about $2. A couple years later, it had risen to $12, and the same friend kept insisting on the deal. It's happening, he'd tell me. Get on the boat. So finally, I did, and I put some of my own money in the game, too. In about a year, my $2,000, half his, half mine, turned into $120,000. The money completely changed my life. I cashed out most of it. I bought 10 acres of dirt cheap property in West Texas,

put some of it away in the stock market and used the rest as financial runway that allowed me to quit my job and start this newsletter. Meanwhile, the small fraction I left in crypto has continued to grow since. I first sold around when Ether was trading at $800. It's now worth over $2,000 and it has eclipped $4,000 at various points. I share all of this for three reasons. One, as a disclosure, so you know that I have some skin in

the game here. Two, to make the point that I've been following crypto closely for more than a decade now, so I understand the space and the people who inhabit it. And three, so it can come with some authority when I say, despite how positively cryptocurrencies have impacted my life, I think a government cryptocurrency reserve is a terrible idea. For starters, cryptocurrencies are incredibly unstable. Participating in the crypto market is basically a joke among friends, as we all just hold on and watch the value of our assets fly to the moon and then come crashing back down in a matter of days. The volatility, especially of smaller assets like XRP, Solana, and Cardano, is genuinely hard to explain to investors used to the stock market.

Crypto is not the S&P 500 or some flashy new tech company. It is not gold or oil or any other kind of asset you're used to watching fluctuate. It is an entirely different beast. We still don't know all the details about what a U.S. crypto reserve would look like, so much of my response to Trump's announcement is speculative. But one could reasonably infer it will mean the administration is investing your money, that is our tax dollars, into these crypto holdings. Again, as someone who has lived the highs and the lows, this is deeply irresponsible. Furthermore, even the biggest crypto advocates

in the world are skeptical. Renowned tech investor Jason Calacanis said Trump was elected for fiscal responsibility, immigration, and ending wars, not to buy crypto bags from the donor class. Brian Armstrong, the CEO of Coinbase, the most popular app for holding crypto, suggested Trump should reconsider

and only use Bitcoin in any kind of reserve as it might serve as a successor to gold. Anthony Pompliano, one of crypto's biggest advocates and a supporter of the Trump administration, responded to the news by saying, we seem to be getting a random smattering of speculative tools that will enrich the insiders and creators of these coins at the expense of the US taxpayer.

One friend of mine who works at one of the largest crypto companies in the world told me quote, It's bad, man, for everyone. But even pro-Trump crypto folks are kind of iffy on most of it. Very scammy, very narrow and short-term. And that's what the crypto optimists are saying. From my vantage point, this reserve opens the door for cartoon level corruption. I said this when I returned from maternity leave, but Trump's entry into crypto is one of the most blatantly corrupt things

I've ever seen a president do. And I've been shocked it hasn't been a bigger story. Trump launched his own meme coin on the eve of his inauguration and was promoting it to supporters just days before he was sworn into office. He can now accept payments without any public disclosure from anyone he wants, like say a Chinese billionaire who invested $75 million into Trump's crypto venture

and then coincidentally had his federal investigation frozen. To state it as plainly as possible, this reserve stands to benefit Trump, his family, and his administration's new technocrat allies. Trump's son Eric had been encouraging people to buy the dips in crypto prices a few weeks ago. Eric and his brother, Donald Jr., just so happen to help run a family crypto venture that is heavily invested in these coins. The day before Trump's announcement, someone made a massive $200 million purchase of Ethereum

and Bitcoin. We have no idea who, because that is the nature of crypto, but we know they had an enormous payday after Trump's announcement. Then the price came crashing down again, which indicates a bunch of people probably bought crypto anticipating this announcement, then sold and cashed in, which in normal finance we would call insider trading. Which brings me to David Sachs, the newly appointed crypto czar in the Trump administration. Sachs, perhaps sensing the corrupt nature of this announcement was a little too obvious,

assured his followers that he sold all of his personal crypto holdings prior to joining the administration. Hilariously, his post on X is now littered with community notes informing readers about the venture capital firm he is heavily invested in whose five biggest holdings happen to be the same five digital assets Trump chose for the crypto reserve. Sachs denies this and says he will provide an update at the end of an ongoing ethics process. This is not a coincidence.

Anyone who knows anything about this space knows that the three small coins Trump chose and the only ones he remembered to include in his first announcement were not obvious picks, but they certainly helped people like Sachs. That is classic textbook corruption and it's a feature, not a bug. This is to say nothing of Trump's Silicon Valley boosters who own, operate, or are invested in crypto firms. It's to say nothing of Trump reportedly planning to eliminate the capital gains tax on crypto sales which would benefit him and his family when they start selling off his meme coin. It's to say nothing of Trump reportedly planning to eliminate the capital gains tax on crypto sales,

which would benefit him and his family when they start selling off his meme coin. It's to say nothing of the Treasury announcing the end of a Biden-era enforcement of databases meant to combat shell companies. Meanwhile, Trump's tariffs are beginning to spike commodity prices and the stock market is already taking a hit. I have no idea if a story like this will pierce through the noise and impact the electorate, but I agree with the Trump friendly critics who say this is not what people put him in office to do. We'll be right back after this quick break. All right, that is it for my take, which brings us to your questions answered. This one is from a reader identified as SZ from New Mexico.

SZ said, discussions about abortion seem to suffer especially strongly from talking past each other. Proponents and opponents of abortion access often seem completely unaware of the other's arguments. How can we get debate and argument on this topic to be more productive? So some basic psychology here can explain why people have trouble communicating on divisive political issues like this.

One relevant phenomenon is called motivated reasoning, a common pattern people fall back to in heated conversations. Motivated reasoning is an implicit psychological defense process that seeks to minimize anxiety-evoking threats and maximize positive emotions. As a result, emotion centers of the brain become overreactive, and parts of the brain associated with rationality and emotional regulation essentially shut down.

In other words, a different perspective on a political topic that holds emotional value, like abortion, is likely to trigger motivated reasoning processes, which then makes it hard for people to have the ability to engage in conversation rationally. There are ways to navigate this trap, though. If you're discussing or debating abortion or any divisive topic, really, you should try leading with personal experiences, maintaining neutral body language, using a calm tone while speaking, and attempting to introduce new frameworks for the topic rather than just the political ones.

Of course, a lot of this is key to our work here at Tangles, so we always appreciate questions like this one. All right, that is it for today's Reader Queue. I'm gonna send it back to John for the rest of the pod, and I'll see you guys tomorrow. Have a good one. Peace. Thanks, Isaac.

Here's your Under the Radar story for today, folks. President Trump's planned 25% tariffs on steel imports are already affecting prices for the material, with the benchmark price for domestic steel reaching more than $900 a ton last week, a roughly 25% increase on the year. At the start of Trump's term, a ton of steel sold for less than $700, but domestic producers are now reportedly quoting customers' prices of $1,000. While demand for U.S. steel has remained relatively unchanged, domestic producers have raised prices in anticipation of the tariffs, and US prices

have now moved above par with imported steel. Bloomberg has this story and there's a link in today's episode description. Alright, next up is our numbers section. The value of the global cryptocurrency market as of 1130 A.M. Eastern is 2.74 trillion dollars. The percentage decrease in the global crypto market in the last 24 hours as of 1130 a.m. Eastern is minus 8.24 percent. The percentage of U.S. adults who say they are not confident that current ways to invest in, trade, or use cryptocurrencies are reliable and safe is 63% according to a February 2024 Pew Research poll. The percentage of US adults who say they have ever invested in, traded, or used

a cryptocurrency is 17%. And the percentage of US adults who have invested in crypto who say their investments have fared better and worse, respectively, than they expected is 20% and 38%. Alright and last but not least, our Have a Nice Day story. Sergio Gutierrez Benitez was addicted to drugs at 11 years old and at 18 was a thief who worked solely to fund his addiction. Eventually Gutierrez Benitez pursued redemption, going to rehab and working to become a priest dedicated to helping those who struggled with addiction and poverty.

With the goal of earning money to fund an orphanage, Gutierrez Benitez took on a secret side career, wrestling. Wearing a mask and taking on the name Frey Tormenta, he eventually saved enough money to fund the orphanage, becoming the inspiration for the film Nacho Libre. Columbia One has this story and there's a link in today's episode description. Alright everybody, that is it for today's episode. As always, if you'd like to support our work, please go to reetangle.com where you can sign up for a newsletter membership, podcast membership, or a bundled membership that gets you a discount

on both. We'll be right back here tomorrow. For Isaac and the rest of the crew. This is John Law signing off. Have a great day, y'all. Peace. Our podcast is written by me, Isaac Saul, and edited and engineered by Duke Thomas. Our script is edited by Ari Weitzman,

Will Kavak, Gellysol, and Sean Brady. The logo for our podcast was made by Magdalena Bikova, who is also our social media manager. The music for the podcast was produced by Diet 75. And if you're looking for more from Tangle, please go check out our website at reedtangle.com. That's reedtangle.com.