Donald Trump’s pitch to the crypto crowd lacks logic

{"text":[[{"start":8.3,"text":"Donald Trump’s plans to create a bitcoin strategic reserve pumped up the crowds in Nashville this weekend — and lifted the cryptocurrency too. "},{"start":15.854,"text":"Still missing was any logic to the presidential hopeful’s verbiage. "}],[{"start":19.9,"text":"Cash and gold reserves typically provide stability for countries with non-US dollar currencies. "},{"start":25.403999999999996,"text":"When financial or other crises hit, it helps to have a store of emergency dollars to cover (US dollar denominated) import bills or shore up the home currency. "},{"start":34.333999999999996,"text":"That need hardly arises when you are the reserve currency and can simply print more. "}],[{"start":39.04,"text":"In any case, being a force for stability is a tough ask for a volatile asset. "},{"start":43.757,"text":"Emerging markets would have struggled to weather bank runs if they had stacked their FX reserves with their neighbour’s equally weak currencies — Mexican pesos for Argentina, say. "}],[{"start":53.71,"text":"Reserves also need to be liquid. "},{"start":56.064,"text":"Even assuming a future Trump administration did away with the red tape that means seized bitcoins are held in Washington, crypto markets are neither deep nor liquid. "}],[{"start":null,"text":"

"}],[{"start":65.17,"text":"All the other plumbing that makes buying and selling government debt a breeze, regulation, infrastructure, settlement and trading itself, are absent or at the very early stages when it comes to bitcoin. "},{"start":75.724,"text":"Ditto transparency and efficiency. "},{"start":77.967,"text":"There are no rating agencies or instruments like credit default swaps to help gauge counterparty risk. "}],[{"start":84.19,"text":"For sure, the amounts envisaged are small. "},{"start":87.26899999999999,"text":"The US holds 213,000 bitcoins, or 1 per cent of those in circulation, according to Bitcoin Treasuries which compiles data on corporate and government holdings. "},{"start":96.67399999999999,"text":"Those existing holdings — worth about $15bn at current prices — are the result of seizures from illegal operations, notably online dark web Silk Road. "},{"start":106.067,"text":"Even lifting the level to Senator Cynthia Lummis’s proposed 5 per cent would still be a fraction of what the country’s gold reserves are worth. "}],[{"start":114.13,"text":"What would be the advantage? "},{"start":115.947,"text":"The stated aim, per Lummis who is behind the proposal, is to temper inflation and “secure our economic future”. "},{"start":122.152,"text":"Governments and central banks have many other levers they can pull, fiscal and monetary, to alleviate inflationary pressure. "}],[{"start":129.71,"text":"Raising the spectre of an arms race with China, as Trump did, misses the point. "},{"start":134.639,"text":"True, China’s holdings of Bitcoin are second only to the US. "},{"start":138.55700000000002,"text":"But Beijing’s real crypto swagger is likely to come from its own crypto coin (even if usage of this central bank digital currency has so far been decidedly unimpressive. "}],[{"start":148.49,"text":"It remains to be seen if Trump’s courting of the crypto crowd will translate into votes. "},{"start":153.20700000000002,"text":"It is a pretty safe bet that it will not translate into a workable policy. "}],[{"start":157.12,"text":""}]],"url":"https://creatives.ftacademy.cn/album/165416-1722331240.mp3"}