The Agenda with Steve Paikin (Audio) - What Does the U.S. Gain from Trump's Crypto Policies?

Episode Date: May 7, 2025

After tariffs, policies around crypto currency appear to be a domestic priority for the Trump Administration. As a presidential candidate, Trump vowed to make the U.S. the crypto capital of the world. But some of his moves in crypto – and those of his family – have left even ardent supporters of the sector recoiling. So, what does the U.S. gain from Trump's crypto policies. See omnystudio.com/listener for privacy information.

Hello everybody in the Hammer and Beyond. We are coming your way. May 10th at the Music Hall in downtown Hamilton. We're recording a new episode of TVO Today Live and we'd love to see you there. We're talking to the amazing and multi-award winning Canadian musicians, Sarah Harmer, Cadence Weppen, and Tom Wilson,

about the power of music and musicians in our culture, and especially during tumultuous political times. Tickets are free, thanks to the Wilson Foundation. Go to tvo.org slash tvotodaylive or search it directly on Eventbrite. So join us May 10th, 7 p.m. in Hamilton. After tariffs, policies around cryptocurrency appear to be a domestic priority for the Trump administration. As a presidential candidate, Trump vowed to make the US the crypto capital of the world.

But some of his moves in crypto and those of his family have left even ardent supporters of the sector recoiling. So what does the US gain from Trump's crypto policies? Let's find out. We'll ask. In St. Paul, Minnesota, Richard Painter, the S. Walter Ritchie Professor of Corporate Law at the University of Minnesota Law School

and Chief White House Ethics Lawyer in the George W. Bush Administration. In Durham, North Carolina, Lee Reiners, lecturing fellow at the Duke Financial Economic Center at Duke University and a formal official with the Federal Reserve Bank of New York. In Philadelphia, Pennsylvania, Tonya Evans, professor at the Dickinson Law faculty at Pennsylvania State University where she teaches, among other things, blockchain, cryptocurrency,

and the law. And in New England, Molly White, independent cryptocurrency analyst and writer of the Citation Needed Newsletter. And Molly has been on our program before and we should just say, as I welcome everybody, we are being somewhat ambiguous about where she is right now because unfortunately she deals with a lot of harassment and security crapola. So Molly, we're just saying you're somewhere in New England and we thank everybody for joining us.

Let's start with this here. This is something, just by way of showing how Donald Trump's position on this issue has changed, this is something that Mr. Trump posted to Twitter in July of 2019. He wrote, 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. Unregulated crypto assets can facilitate unlawful behavior including drug trade and other illegal activity. That was then. Here now is a clip of Donald Trump speaking at a Bitcoin conference in Nashville

six years later. This is last July, 2024, about four months before the presidential election. Sheldon, if you would, let's have that clip. A bond taken office. I will immediately appoint a Bitcoin and crypto presidential advisory council. Would anybody like to be on that particular council? Please raise your hand. Their task will be to design transparent regulatory guidance for the benefit of the entire industry and they will get it done in 100 days.

We will have regulations, but from now on the rules will be written by people who love your industry, not hate your industry. People that want to make it clear and simple, straightforward and fair. People that want to see your industry thrive, not dive. Okay, Tonya Evans, let's start with you. Any idea how or why Mr. Trump's policy or views on this policy have changed over the last five years? Well, I think there's no question that his views have been heavily influenced by the amount of money that was injected into the campaign.

And so you see this seismic shift from 2019 to the lead up to the 2024 elections and certainly what we've seen him delivering on his promises in the first 100 days to be sure. But I think we have to acknowledge the role that campaign contributions have in moving the balance of power across the board and certainly with respect to crypto. And the best pace of this last 100 days is undeniable. I think it raises a real question about the speed, the substance, and also the public purpose. But as we assess the policy shift, I hope that we don't lose sight also of what's at stake beyond his office to what's at stake for everyday people. Molly White, let's do a little fact check here.

That clip is from last summer. He was promising within 100 days to bring in regulations that would be written by people who love the industry rather than hated it. Okay, we're 100 days into Trump's administration. Has that happened? Well, he certainly invited a lot of crypto industry figures to influence the policy and

to propose regulations that they think would be beneficial to the industry. In terms of actually instituting new legislation, that has not happened yet. There are various bills making their way through Congress, but nothing has been signed into law. The majority of what we've seen so far has actually been the removal of regulatory oversight for the crypto industry. We've seen the Securities and Exchange Commission, which primarily regulated the crypto industry previously, drop the majority of cases that were open against crypto industry companies

that had violated securities laws or even been accused of fraud. And we've seen instruction from the SEC indicating that they no longer intend to pay much attention to the crypto industry, carving out exceptions for mean coins and stable coins and various other aspects of the crypto world that they say are not under their authority. And it's essentially left a vacuum where no other regulator has been named as you know in charge of overseeing that. So so far we've seen very little in the way of new regulation or legislation but we have seen the removal of the majority of what was in effect previously.

Let me get Lee Reiner's on that too. What one thing do you think the president has done that has been most helpful to this sector so far? Well, I think there's no doubt the most helpful thing is appointing Paul Atkins to run the Securities and Exchange Commission. And even before Mr. Atkins was sworn in office a few weeks ago, you still had a Republican majority at the commission. And President Trump had nominated Commissioner Mark Eyter to serve as an acting role. And as Molly said, you know, the commission wasted no time in essentially reversing every single aspect of the previous

administration's crypto enforcement program as it applies to securities laws. So, you know, every single case that was brought has either been dismissed or paused. Every investigation has halted. The SEC has disbanded their crypto enforcement program. The previous head of that program got moved to the IT department. And again, as Molly said,

the SEC has put out a number of statements suggesting that meme coins are not security, stable coins are not securities, proof of work mining, which is the process at which, you know, new bitcoins get created is not a security. So essentially, the SEC is signaling that, you know, really when it comes to cryptocurrency, securities laws do not apply. Richard Painter, maybe you could follow up by telling us how you judge the differing approach the Trump administration is taking to this issue compared to the previous Biden administration.

I don't think I either one of them were very good. The problem is the SEC tried to win some cases demonstrating that crypto is a security, it meets the definition of a security, but they lost those cases in the courts because we're dealing with a statute that needs to be amended. We need to add the word cryptocurrency to the 1933 Securities Act and the 1934 Securities Exchange Act. We went through this with securities based swap agreements during the Clinton administration where they were unregulated. They weren't in the clit in the definition of a security.

They finally were added to the definition of security in the year 2000. And then during the Bush administration, there were not adequate steps taken to regulate securities based swap agreements. And we see what happened. We're going through this again with cryptocurrency. The SEC has been unsuccessful in convincing courts in most cases that cryptocurrency is a security. We need to amend the statute.

Why didn't we amend the statute? Because the cryptocurrency industry has enormous influence in Washington. And this isn't just about Donald Trump. Sam Bankman Fried and the Bankman Fried family funneled millions of dollars worth of campaign contributions, mostly to Democrats, some to some Republicans. Barbara Fried's Mind the Gap PAC raised a huge amount in Silicon Valley. They had enormous influence.

Bankman Fried was testifying in front of Congress, advising Congress on crypto regulation months before he was arrested. He's now serving 25 years in prison. And what's happening? He's trying to get a pardon from Donald Trump. His father, Joseph Bankman, is making pitches to Donald Trump, favoring Donald Trump's sovereign wealth fund. So bottom line is we have both political parties have been captured

by an unregulated industry. And we need to get a handle on this. Congress needs to either add cryptocurrency to the 1933 and 1934 act, or set up an alternative regulatory framework. That needs to happen right away. But what do we have? Huge amount of campaign contributions. Most of it to the Republicans this time around.

It's very different in 2020 with the Bankman Free Crime family supporting the Democrats. But now almost all of the Republicans. And what else do we see? We see the President of the United States and his family with massive personal holdings in cryptocurrency, talking about setting up a cryptocurrency reserve where they may very well buy their own securities. Okay, to that end. I mean, they're home in cryptocurrency.

They're feeding a bubble, and this could end cataclysmic, be a cataclysmic impact on the economy if we don't get a hold of this now and figure out what's going on and regulate the industry. Well, to that end, let me get Molly back in here and ask her to tell our viewers and listeners what the World Liberty Financial Organization is. World Liberty Financial is a crypto platform that was launched by various Trump associates,

and it was entirely branded with Trump's, you know, picture and his name and his likeness, essentially. During the campaign, the Trump family tried to keep somewhat of an arm's length relationship with that company, claiming that they were not running the company, essentially, even though Trump was receiving 75% of protocol revenues. After Trump was elected and inaugurated, the Trump family took a majority stake in that company, sort of revealing the extent of the connections to actually leading that company. They have issued a token called WLFI. They don't actually have much in the way of a business yet. They have announced what they plan to do with the crypto platform, but for the most part now, they're simply raising money via the WLFI token. And they have been pretty successful at that, at least since Trump

won the election, because it has been viewed, I think, by many as a way to buy influence with Trump. We've seen people like Justin Sun, who is a crypto entrepreneur, purchasing substantial amounts of this token, and then earning an advisory position on the World Liberty Financial team. Shortly after that purchase, the SEC case against Sun and his company was dropped. And so we've seen this company being used as a conduit essentially for contributions directly to Trump personally, not even his campaign, but to Trump and his family, who

serve as both advisors and the financial recipients of a substantial amount of the proceeds that this company is earning. Tanya Evans, how deep would your concerns about this situation be with you? I think it's no question that when you have this intermingling of public officials and also private enterprise, underneath it all is an undermining of trust. I do want to say I think it's important to understand how we got here as well. Richard certainly mentioned the Grayscale case, the Ripple Labs case, library is coming to mind as well. When you think about all of the losses

based on arbitrary and capricious overreach and Gary Gensler's regulation by enforcement is a common term that we hear in our industry as opposed to also promulgating regulations using that delegated authority from Congress to actually promulgate the rules of the road. So that kind of set up this scenario where a ton of money flooded in to go in the opposite direction.

But what I wanted to add on top of that is the SEC wasn't the only kind of the battle between the SEC and the CFTC, weren't the only things in terms of distinguishing between securities and commodities and a lack of agreement, but also the prudential regulators as well, the Federal Reserve, the FDIC, the Office of the Comptroller of Currency as well. And I think that was kind of the perfect storm that combined with also the amount of money that floods in. Bring it back finally to the point that you made when you have not only an elected official but the one at the highest office of the land. It certainly presents a host of issues, not the

least of which is the undermining of public trust of the government. Well, I do want to ask Lee about that. Do you think the president himself, or more broadly, his family members, are being as open and transparent about their involvement in all of this as they ought to be? Well, I mean, frankly, they're being pretty transparent. They're not trying to hide the ball at all. But I think we should all be very concerned. I mean, frankly, we have never seen this level of conflicts in an American presidency.

You know, the word unprecedented gets thrown around a lot, but this is truly an unprecedented situation. So not only is the president sort of combining his sort of public service with his financial interests, but he's really opening himself up and the presidency to potential manipulation and frankly bribery. I mean, with the nature of crypto is that these things are anonymous, they're borderless. You can send, it's certainly a lot easier to send $100 million worth of crypto than it is $100 million worth of cash.

And frankly, that's what you've been seeing. I mean, so now with this meme coin, there's going to be this dinner that's going to be hosted at President Trump's golf course outside of Washington, the top 220 holders of the meme coin, you know, get a 10 dinner, you know, all the transactions with the meme coin. You know, the president and his company gets a cut of this. I mean, this is just one slipper, frankly, of what the president's been doing. I mean, it's frankly hard to keep up.

Every week there's some type of new venture that's announced. The latest is World Liberty Financial now has a stablecoin and a UAE sovereign wealth fund is going to use that stablecoin to buy a large stake in the cryptocurrency exchange Binance, which pled guilty to money laundering violations and the CEO spent four months in prison. So I mean, it's just staggering, frankly, what's what's going on. And I just want to push back real quickly, Steve, on something that Richard and Tanya said about the SEC track record.

Frankly, I mean, it was an incredible track record. And I submitted a 30 page statement about a month and a half ago to the SEC ahead of my participation in the Crypto Task Force round table. And I went through case after case where the SEC presented the facts to a judge that said, look, we think these cryptocurrencies are securities and judge after judge

agreed with the SEC. So frankly, they only had one loss, and that was a partial loss in the Ripple case. The SEC was probably going to win that on appeal. You had two other judges in the same district court repudiate that ruling. The Grayscale case was an administrative law case. So, you know, the SEC was right, I thought, on the law. Judges agreed with that.

But obviously, elections have consequences and Trump ran on being the pro-crypto president, and he's certainly done everything within his power to make that a reality. Richard Painter, how confident are you that no laws are being broken by Trump and or his family? Not very confident at all. And my point about the securities laws is we need to add the word cryptocurrency to the 1933 act and the 1934 act, and not have the SEC have to go to court and argue these

cases under a 1940s case involving Orange Groves in Florida and whether those were security, the Howey case. So we need to do that. Congress should have done that over the past four years. I wish the Biden administration had gotten that through Congress ASAP, but maybe they couldn't have because the cryptocurrency industry has Congress bought, both political parties bought. And what we have now is a president with serious financial conflicts of interest. The problem is the financial conflict of interest statute, 18 United States

code 208 does not apply to the president or the vice president or to the members of Congress. This is a criminal statute, making a crime for anyone else in the executive branch to participate in a government matter in which they have a personal financial interest. That would be a felony, potentially, under 18 USC 208, but not for the president. Presidents supposedly can have financial conflicts

of interest. Now, as I pointed out in an interview in the Daily Telegraph, we have never had a president with this serious financial conflicts of interest since we had slave owners in the White House. And I think we learned from our early years of our history of our country how tragic financial conflicts of interest can be. When you have people of a vested interest in whatever financial system, whatever means of production in the case before the Civil War, slave owners and plantations

having the highest positions in the land and the Senate and the House and the White House. And now what we have is an industry that could wreak havoc on our economy and instead of regulating it, the President of the United States, his family members and members of Congress and cabinet members, apparently, are getting involved in investing in it and trading in it. Okay. I take your point here. I take your point.

Let me get to Tanya Evans on if we wanted to create something that would stand up to greater scrutiny or would be a sort of healthier crypto industry, what would it look like that makes it different from what we've got today? Well, I always, in many of my remarks, and Lee and I testified for the House Financial Services Subcommittee on digital assets some years ago and talked about this point as well, the rules of the road come from Congress. The delegation of their legislative authority is handed over to the executive branch so that the executive branch could execute those things on a day-to-day basis.

Congress has got to step up for all the reasons that were just mentioned and in order, as you said, to create the opportunity for cryptographically secure digital assets in various forms, from Bitcoin to stable coins to memes. There are thousands of different types of points and tokens. And it's always challenging to have this conversation about what would be in the best interest of,

not just the industry, but the ultimate end user, the consumer, the small business owner, when we don't have a clear set of rules that has been mentioned to specifically identify digital assets. of rules that has been mentioned to specifically identify digital assets. The legislation that has been moving through both the Senate and the House were in progress before this current 47th presidency.

The allocation of resources is always political. It need not be partisan on these issues, but we need the clarity so that there aren't the gray loopholes that were mentioned in order to undermine the confidence, not just in the presidency, which is important, and those who are involved in the cabinet, but also and certainly for everyday Americans. Molly, let me get you back in here and follow up on this path.

So far, we've been talking basically about what national governments ought to be doing on this. What about at the state level? What kind of influence or inroads has crypto made at that level of government? Well, we are starting to see a lot of crypto influence at the state level with crypto companies trying to exert influence on state-level regulations. We're seeing crypto interests being pursued in various states, particularly with proposals recently to establish crypto

reserves. We've seen several states trying to echo some of the promises that Trump made about establishing digital crypto or Bitcoin stockpiles. Legislation has been proposed in several states to do that. Most recently we saw it make its way through Arizona legislature only to be vetoed by the governor. And so, you know, we're starting to see sort of concerning adoption of crypto at the state level in ways that I think much like at the federal level don't clearly benefit the everyday citizen or constituent of those states. I'm going to ask our director Sheldon Osmond.

Sheldon, at the bottom of page three, we've got a quote here and I want to read this. This is from the April 2025 Financial Stability Report. It was published by the Bank of Italy, that nation's central bank and top financial regulator. And here's what they had to say, the strong growth of Bitcoin and of other crypto assets with high price volatility means risks not only for investors, but also potentially for financial stability, given the growing interconnections between the digital asset ecosystem, the traditional financial sector, and the real economy. Okay, Lee, let me get you in here because of course you work for the New York ecosystem, the traditional financial sector, and the real economy. Okay, Lee, let me get you in here because, of course, you work for the New York Fed,

which is part of the US central banking system. How do you see the potential of cryptocurrency run amok, I guess, potentially ruining the economy of your country and ours? Well, I think that the odds of that happening are growing by the week, Steve, and Richard is right. I mean, we're sort of slow walking our way towards another financial crisis. And the reality is that most people don't use or care about crypto, and I get that for good reason.

But the same can be said about mortgage-backed securities and credit default swaps around 2008, right? No one knew about those or cared about those until they blew up the entire global economy, and then we did care. And so what's happening with crypto, not only is the asset class just getting bigger and more people are investing in it,

but it's becoming more interconnected with their traditional financial system. So now we have things like exchange-traded funds, which are very common and well known investment products in the US. Blackrock is the largest asset manager in the world. They have the most advanced ETF franchise, their iShares franchise.

They're offering crypto ETFs. We have a publicly traded company, formerly known as MicroStrategy. Now it just goes by strategy that does nothing but issue debt and equity and invest the proceeds in Bitcoin. There's a sense of a software business there, although it doesn't make any money. That company is now part of the NASDAQ, so people might be exposed to crypto whether

or not they realize it. And you have asset managers like Fidelity, a 401k providers that are starting to offer crypto products as well. And so, you know, as these bills make their way through through Congress, you know, and most of these are effectively giveaways to the crypto industry, it's going to further entwine crypto with the mainstream financial system. So the next FTX and there will be another FTX. I mean, this this industry has been prone to numerous boom and bust cycles. There's no reason to think that's going to go away. So the next time there is an FTX, it's probably not going to be isolated to just the crypto economy the way that FTX was.

It's probably going to spread into the traditional financial system. And that is something that should worry us all. Can I, I'm going to ask our director Sheldon Osment again for a four shot if I can of all four guests, because I would like to, thank you, I would like by a show of hands to see how many of you four hold cryptocurrency in your personal lives. Show of hands please. Anybody? Nobody?

Can't confirm or deny. What does that mean, Tonya? My client has no further comment. I'm like Molly. I could be anywhere. We don't know. Now that to me... I will have a very, very small amount for like research purposes, but I'm not invested.

As do I. As do I. Okay. Well, I find that interesting. Like, maybe you could help us with this, Tanya. Go ahead. Why would people want this, not just for research purposes, but ultimately as an alternative way of doing business in the United States? Why do they want it? Look, we already live in a digital cash world, not just in the United States, but around the world.

I see it as another alternative to the fact that sometimes I handle physical cash, sometimes I'm sending Venmo, sometimes it's a wire, sometimes I have to transfer my dollar into some other foreign currency. And crypto generally, again, there are thousands of types, so they're certainly not a monolith. Bitcoin is very different from ETH, which is very different from XRP, which is very different from a stable, which is very different from a central bank digital currency. But writ large, this is not a matter at this point of if, but the reality that it is. And how can people, if they choose to, and with the right information and the right support, enter into the space safely, legally and confidently.

And that takes on a new level because quite frankly, we're using most of existing technologies from web 2.0. When you think about the Internet peer to peer file sharing now using and certainly consensus protocols and cryptography, the encryption method, not just to exchange information, but now value. That is what it is. And my concern is always that the haves, not only in terms of finances, but also information will carve out this territory and everyone else will even know what hit them.

Okay, Tonya Evans, I know you've got a heart out on this and you've got to go off and do something else. So let me take this moment to thank you for joining us on TVO tonight and contributing to our discussion. And we'll now allow you to go off and do whatever else you have to do. And I'll follow up with Molly White

by asking the question, is there a way, I mean, we've heard all of the pitfalls that you've all mentioned, and we've also heard about how you all think the system could be improved. Is there a way, Molly, to actually do this in a way that protects consumers while respecting all of those desires for innovation and alternatives that have been discussed already? Absolutely. I mean, I think that the regulations that we were seeing imposed on these companies

previously during the past administration were not nearly as onerous as the crypto industry liked to claim. These were fairly bog standard securities laws that hundreds, thousands of companies comply with, with no problems. And the crypto industry was claiming that they were unable to comply with these regulations, you know, that it would put them out of business, which I think is a very concerning statement to hear from any sort of company, that they cannot comply with even the most basic regulations without it ruining their business. So I think that a lot of the rhetoric around crypto regulation has been completely exaggerated by the crypto industry because they want to avoid regulations

and make larger profits as a result. But it would not be difficult to have reasonable oversight of crypto companies to require transparency so that consumers know what they're getting into when they make financial decisions, and to impose basic degrees of consumer protection on these companies so that they are not blatantly taking advantage of their customers. These are very, very basic requirements and it is frankly shocking that the crypto industry claims that this is impossible for them to do. Richard Painter we're down to our last minute here but the obvious last question is if Congress is

bought and paid for by this industry what hope do any of us have to see any of these consumer protections go forward? I think the voters need to come out and make it clear they are going to hold politicians accountable for what's going on. Well, and every time I hear about innovation in finance, I wonder what's going on. We went through all that in the 1990s and the glorification of securities based swap agreements and fancy this, that, and the other thing on Wall Street. We need innovation in pharmaceuticals, in energy, in industry, in agriculture.

There are a lot of places we need innovation. A lot of innovation in finance has historically led to fraud. And this is what happened with securities by swap agreements under the Clinton administration when Larry Summers, the treasury secretary at the end there, didn't see a derivative he didn't like. And then the Bush administration failed to regulate. And now we see with crypto the same thing and this phony effective altruism philosophy being pushed by the Bankman Fried family and others that bought in,

it got a lot of liberals on board and now they veer to the right and they get the Trumpers on board as well. So Donald Trump has changed his posture toward cryptocurrency. Well, he's of course investing in it. And this is how politicians feed a bubble. And it's been happening over and over again. We don't study history. We don't learn from history, whether it's 2008 or 1929.

We're going all the way back to 1720 when they had the South Sea bubble in the parliament, they were all buying and selling the stock and passing bills to help that company. It was a complete fraud, whole phony and a collapse in 1720, created an economic crisis in Great Britain. We don't learn from history, so we repeat history. If that's what people want to do is they want to repeat 2008 and go through another great recession or maybe a depression when you throw in a trade

war with Canada and all of our allies. That's what's going on right now. We're repeating the 1930s, smooth-hauling trade war. Well, I can assure you, Richard, I can assure you... You repeat history or we don't? I can assure you, nobody in Canada loves this trade war and I don't think we have any more affection for the 2008 Great Recession. But Lee Reiner, same last question to you.

Namely, how do we make any progress on this if in fact most of Congress is bought and paid for by the industry? It's a good question, Steve. I wish I had a better answer for you. I mean, unfortunately, I'm a bit of a cynic. I mean, I've been at this for the better part of a decade now. And the truth is that no one gets paid to be a crypto skeptic. No politician is going to get campaign contributions for standing up to the crypto industry. There's no one going to vote against them. I mean, I certainly share Richard's wish that voters become more educated and aware, but, you know, they have busy lives and they don't. Why would they care about something that doesn't impact their day to day at all?

So, look, I don't think this story is going to end well. It's just a matter of when the tide turns and hopefully the damage will be rather limited. I think the longer this goes on, the greater the risk becomes. But the political calculus will change just like it changed after FTX. There was a narrow window of opportunity to get meaningful reform done. We failed to do it. Congress failed to do it. And I guess we're gonna end on one note

of sort of hope and optimism. Look, we have a federal system of government here in the US, the states still have a role. We have state blue sky laws, state securities laws. Historically, states have been on the front lines when it comes to consumer and investor protection. And I think maybe that's where the action lies now. We just saw the Oregon State Attorney General

file a lawsuit against Coinbase, the largest crypto platform here in the US. The lawsuit was very similar to one that the SEC had filed a few years ago, and which the Trump administration dismissed. So maybe that's a harbinger of things to come, that states are gonna step into the void here now that the federal government has decided that, when it comes to crypto, not only are they not going to regulate it, but they're going to be the main cheerleader for crypto.

Understood. Richard Painter from the University of Minnesota. Molly White, the independent crypto researcher. Lee Reiners, Duke University. We're really grateful to the three of you, plus Tonya Evans, whom we had earlier from Pennsylvania State University, for joining us on TVO tonight. Many thanks. Thank you.