The idea of a “strategic cryptocurrency reserve” is so ridiculous that it’s almost hard to believe it’s real. And yet, on Thursday, President Trump issued an executive order to establish just such a fund, with his self-appointed crypto czar, David Sacks, describing it as “like a digital Fort Knox.”
But as Cliff Asness astutely points out in his recent article The New ‘Crypto Fort Knox’ Is as Dumb as It Sounds, the U.S. has been off the gold standard since 1933. The comparison isn’t just flawed—it’s a sign of just how unserious this whole endeavor is.
At its core, this plan takes the flawed concept of a sovereign wealth fund and dials it up to absurdity. Sovereign wealth funds are typically established by nations with budget surpluses or vast natural resource revenues, neither of which apply to the U.S., which currently has a staggering $36 trillion in debt—more than its entire GDP.
Asness puts it bluntly: “I can think of no precedent of a country with jaw-dropping debts… essentially taking on more of it… to create such a fund from scratch. And for good reason.”
Beyond the sheer fiscal irresponsibility, the idea that the government should be picking winners and losers in any market—especially one as speculative and volatile as crypto—is an alarming level of hubris.
“It is dangerous hubris in a free market capitalist society… to think the central government could or should be responsible for investing the wealth of its citizens rather than those citizens themselves,” Asness argues.
In other words, if crypto is so promising, it should be able to succeed on its own—not through government intervention.
Then there’s the issue of volatility. Crypto is five times as volatile as the stock market, which itself is not considered a low-risk investment. “If we’re going to issue debt to buy super speculative assets… why stop at crypto?
How about a strategic Powerball ticket reserve?” Asness quips. It’s a cutting remark but also a valid question—why should taxpayers be on the hook for what amounts to a highly speculative bet?
And let’s not ignore the potential for corruption. Crypto has long been a haven for scams, fraud, and price manipulation, and Asness warns that a government-backed crypto fund would be an open invitation for cronyism.
“Politicians and political appointees deciding where to invest our collective money… is very obviously fertile ground for tomfoolery, skulduggery, and sundry other -erys.” Given that Trump’s administration is already deeply entwined with crypto interests, the possibility of misuse is not just a risk—it’s practically a guarantee.
Perhaps the most alarming part of all this is how it could directly undermine the U.S. dollar’s role as the world’s reserve currency. Asness warns, “A ‘strategic crypto reserve’ isn’t far from the president exhorting us to start a ‘strategic renminbi reserve.’” In other words, we’d be handing a massive geopolitical advantage to our rivals—an act of economic self-sabotage.
This isn’t just bad policy. It’s reckless, irresponsible, and profoundly unserious. Let’s hope cooler heads prevail before this disaster moves forward.
You can read the entire article here:
Cliff Asness: The New ‘Crypto Fort Knox’ Is as Dumb as It Sounds (The Free Press)
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