Tangle - Trump's federal cryptocurrency reserve.

I’m Isaac Saul, and this is Tangle: an independent, nonpartisan, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”

Are you new here? Get free emails to your inbox daily. Would you rather listen? You can find our podcast here.

Today's read: 13 minutes.

More Tangle coverage.

Looking for more Tangle coverage? Yesterday, we posted an Instagram reel from Shorts Producer Aidan Gorman on the FAA and air-traffic controllers. Later this week, we’ll be posting a conversation on ranked-choice voting between Managing Editor Ari Weitzman and FairVote CEO Meredith Sumpter. Then on Friday, we’ll be publishing a subscribers-only essay from Executive Editor Isaac Saul reflecting on his first six weeks of parenthood.

Quick hits.

1. 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 Zelensky. The White House said it is “pausing and reviewing our aid to ensure that it is contributing to a solution.” (The pause)
2. 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 the speech. (The address)
3. The Senate confirmed Linda McMahon as secretary of education in a 51–45 vote. (The confirmation)
4. The National Science Foundation said 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. (The reinstatements) 
5. President Trump and Taiwan 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. (The announcement)

Today's topic.

The U.S. crypto reserve. 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 23 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. 

Back up: 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, $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 of 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 Sacks the White House A.I. & crypto czar; Sacks is a longtime crypto investor who could stand to benefit from the creation of the crypto strategic reserve.

Today, we’ll share perspectives from the left and right on the Trump administration’s crypto policy. Then, my take.

Agreed.

Commenters from the left and right are skeptical of the idea and agree that a cryptocurrency reserve would carry a great deal of risk.

What the left is saying.

• The left opposes Trump’s plans 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 Noahpinion, 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, that 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 then just include Cardano in his list of cryptocurrencies that he wants the U.S. 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 Alloway 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’s seized from criminals into one unified account? Will anything happen at all beyond a Truth Social post and an executive order? We don’t really know,” Weisenthal and Alloway 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 US government starting a strategic reserve for something whose selling point has, to date, been all about disintermediating the government,” Weisenthal and Alloway wrote. “That 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 make 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 Sacks 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. Sacks 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.”

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 Pompliano 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 the finite supply, the relationship with low-cost energy, and the backing of the strongest computer network in the world, 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,” Pompliano said. “The United States is not in the business of buying stocks or 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 interests in Blackstone, Citadel, Millennium, Tiger Global, Sequoia, Andreessen Horowitz, and your favorite real estate or private credit fund,” Pompliano 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 is 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,” Lynn 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 (£74 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 per cent of GDP,” Lynn wrote. “A crypto reserve may give a few traders a bump, and allow a few 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 stockpiling crypto would send an awful message to the world.”

“By stockpiling bitcoin — the most popular crypto — inside the vaults of places 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 King Dollar; 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 still live in a country addicted to debt that we need foreigners to buy and they are willing to do so for many reasons, including 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.”

My take.

Reminder: "My take" is a section where I give myself space to share my own personal opinion. If you have feedback, criticism or compliments, don't unsubscribe. Write in by replying to this email, or leave a comment.

• I’ve personally benefitted from crypto, and I’ve always been open to the technology.
• A government crypto reserve is a terrible idea that opens us up to fraud.
• At a time when the market is getting shaky, Sacks, Trump, and the administration’s tech backers all stand to benefit enormously from this plan.

In 2014, I was a reporter living paycheck-to-paycheck in Harlem, grinding on the politics beat and waiting for my big break. One night, a friend from college started talking my ear off about this new kind of digital currency. He told me 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 and Bitcoin, but this was different — it was called Ethereum, a 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. 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 most of it out, 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 (I still owe that friend a trip to Europe). Meanwhile, the small fraction I left in crypto has continued to grow since (I first sold around when ether was trading at $800, it is now worth $2,100).

I share all this for three reasons: 1) As a disclosure, so you know that I have some skin in the game here. 2) To make the point that I have been following crypto closely for more than a decade now, so I understand the space and the people who inhabit it. And 3) 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 are 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, “It’s bad man, for everyone, but even pro-Trump crypto folks are kinda 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 paternity leave, but Trump’s entry into crypto is one of the most blatantly corrupt things I’ve ever seen a president do, and I’m shocked it hasn’t been a bigger story. Trump launched his own memecoin on the eve of his inauguration and was promoting it to supporters just days before he was sworn into office. He can now accept undisclosed payments 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’d call insider trading).

That brings me to David Sacks, the newly appointed crypto czar in the Trump administration. Sacks, 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 exact same five digital assets Trump chose for the crypto reserve (Sacks 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 Sacks.

That’s 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 memecoin. 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 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 into office to do. 

Take the survey: What do you think of establishing a U.S. cryptocurrency reserve? Let us know!

Disagree? That's okay. My opinion is just one of many. Write in and let us know why, and we'll consider publishing your feedback.

Help share Tangle.

I'm a firm believer that our politics would be a little bit better if everyone were reading balanced news that allows room for debate, disagreement, and multiple perspectives. If you can take 15 seconds to share Tangle with a few friends I'd really appreciate it — just click the button below and pick some people to email it to!

• Email Tangle to a friend by clicking here.
• Share Tangle on X/Twitter by clicking here.
• Share Tangle on Facebook by clicking here.

Your questions, answered.

Q: Discussions about abortion seem to suffer especially strongly from "talking past each other." Proponents & opponents of abortion access often seem completely unaware of each other's arguments. How can we get debate and argument on this topic to be more productive?

—SZ from New Mexico 

Tangle: Some basic psychology 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 overactive 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 (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 abortion (or any divisive topic, really) you should try maintaining neutral body language, using a calm tone while speaking, attempting to introduce new frameworks for the topic (rather than the typical political ones), and sharing personal experiences that others can relate to. 

A great example for the topic of abortion was written by Sophie Trist, in a piece featured on Tangle back in 2021, where abortion was discussed through the lens of disability. In the essay, Trist argues that, “abortion itself is ableist because it destroys the weak for the benefit of the strong, the ultimate ‘might makes right’ mentality. Abortion makes the right to life, the most fundamental of all human rights, contingent on ability and autonomy.” This unique framework, paired with her use of personal storytelling, makes her argument less likely to trigger motivated-reasoning processes.

Want to have a question answered in the newsletter? You can reply to this email (it goes straight to our inbox) or fill out this form.

Under the radar.

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 U.S. prices have now moved above par with imported steel. Bloomberg has the story.

Numbers.

• $2.74 trillion. The value of the global cryptocurrency market as of 11:30 a.m. EST.
• –8.24%. The percent decrease in the global crypto market in the last 24 hours (as of 11:30 a.m. EST).
• 63%. 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, according to a February 2024 Pew Research poll. 
• 17%. The percentage of U.S. adults who say they have ever invested in, traded, or used a cryptocurrency.
• 20% and 38%. The percentage of U.S. adults who have invested in crypto who say their investments have fared better and worse, respectively, than expected. 

The one-week price changes in the cryptocurrencies announced by President Trump on Sunday, as seen in this interactive chart.

The extras.

• One year ago today we wrote about Trump’s Supreme Court case on immunity.
• The most clicked link in yesterday’s newsletter was Brian Glenn asking Ukrainian President Volodymyr Zelensky why he wasn’t wearing a suit.
• Nothing to do with politics: What is the “feels like” temperature?
• Yesterday’s survey: 8,124 readers answered our survey on the failure of the U.S. and Ukraine to sign a mineral-rights deal with 86% blaming Vice President JD Vance. “All three had a chance to de-esclate the issue, the opposite happened,” one respondent said. Other parties receiving blame were Secretary of State Marco Rubio and former President Joe Biden.

Have a nice day.

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 Fray Tormenta, he eventually saved enough money to fund the orphanage, becoming the inspiration for the film Nacho Libre. Colombia One has the story.

Don't forget...

📣 Share Tangle on Twitter here, Facebook here, or LinkedIn here.

🎧 We have a podcast you can listen to here.

🎥 Follow us on Instagram here or subscribe to our YouTube channel here

💵 If you like our newsletter, drop some love in our tip jar.

🎉 Want to reach 340,000+ people? Fill out this form to advertise with us.

📫 Forward this to a friend and tell them to subscribe (hint: it's here).

🛍 Love clothes, stickers and mugs? Go to our merch store!