- The president wasted little time in putting his stamp on crypto regulation.
- Wall Street hedge fund frets about Trump memecoins and asset bubble.
- Howard Lutnick, Trump's pick for Commerce secretary, fielded questions on ties to Tether.
A version of this story appeared in our The Guidance newsletter on February 3. Sign up here.
We’re only two weeks into Donald Trump’s second term but it feels like everything has changed.
In no time at all, Trump has built a burgeoning crypto empire that encompasses memecoins, a DeFi business, and an investment platform.
While he’s been going hard on tariffs, a bombshell development at the Securities and Exchange Commission has gone under the radar.
On the crypto front: Trump Media and Technology Group now features a partnership with asset management giant Charles Schwab and is staked with $250 million, reported Liam Kelly.
Cash grab
Critical of Trump’s “cash grab,” even many crypto supporters are alarmed at the optics of the president’s move.
One sign that things may get more political at the SEC: Reuters reported that agency lawyers have been told they need permission from politically appointed leaders before formally launching investigations.
How the new regulatory regime will tackle Trump’s financial endeavours is unclear.
What is clear is that the Commissioners — Republican Hester Peirce, Democrat Caroline Crenshaw, and incoming Chair Paul Atkins — will take more control over enforcement earlier in the probe process.
Wall Street, meanwhile, has worries beyond crypto.
Trump threatened to slap 25% tariffs on Canada and Mexico over the weekend, sending global markets tumbling. Traders liquidated a whopping $2.3 billion in crypto, and Ethereum was hit hardest.
While markets rebounded on Monday after Mexican President Claudia Sheinbaum reached an agreement with Trump to hold off on tariffs for one month, the market is febrile.
‘Inevitable collapse’
On Friday, The Financial Times reported that Elliott Management, the hedge fund with $70 billion assets, warned clients that Trump was inflating a crypto bubble destined for an “inevitable collapse.”
Tether and Lutnick Last Wednesday, senators questioned Howard Lutnick, Trump’s pick as US Commerce Secretary, on his ties to Tether.
Lutnick is the CEO of Cantor Fitzgerald, a New York-based financial services firm that is one of 24 broker-dealers authorised to trade US government bonds directly with the Federal Reserve.
In that capacity, Cantor has helped Tether amass and manage billions in US Treasuries in its reserve backing USDT, the world’s most-widely used stablecoin. Lutnick testified that Cantor holds a convertible bond that could provide it with an equity stake in Tether, Aleks Gilbert reported.
Senators quizzed Lutnick on the wisdom of doing business with a crypto firm whose product is linked to extensive levels of money laundering. Lutnick countered by saying no one blames Apple for crimes used with iPhones.
Should Lutnick be confirmed by the Senate — and that looks likely — Trump will have a cabinet officer who is a true believer in the utility of cryptocurrencies.
This is no small thing. In the Biden Administration, the default was set on scepticism. It’s safe to say that Trump has turned the dial to full steam ahead.
But more questions about the propriety of Trump’s crypto enterprises are bound to come as he ratchets up his game.
Edward Robinson is the story editor for DL News. Contact the author at ed@dlnews.com.
