Pro-Trump techies enraged by president’s crypto reserve announcement, causing early rift
The Trump-tech alliance is showing its first real sign of distress. And it’s because of crypto.
President Donald Trump counted on crypto execs and investors for a hefty portion of his
2024 campaign funds. He promised to reward them handsomely if elected by slashing regulations and by
turning the U.S. into “the crypto capital of the planet and the
bitcoin superpower of the world.”
The president got off to a quick start, signing an
executive order calling for the establishment of a working group on digital assets and
pardoning Silk Road creator Ross Ulbricht. The SEC also
dropped its years-long probe into
Coinbase.
While those moves were lauded by the most vocal techies who backed Trump’s candidacy, over the weekend the president took it a step too far in their view. In a post on Truth Social on Sunday, Trump announced the
creation of a strategic crypto reserve for the U.S. that would include not just bitcoin but several other digital currencies —
ether,
XRP, Solana’s
SOL token and Cardano’s
ADA.
For the most part, Trump’s crypto backers all wanted a strategic bitcoin reserve. Such a move would entail using cash to buy bitcoin, which is widely viewed by crypto enthusiasts as a smart way to deploy capital into a decentralized currency that’s an alternative to hard money. As Coinbase CEO Brian Armstrong
wrote on X, bitcoin offers a “clear story as successor to gold.”
By going well beyond bitcoin, the critics say, Trump would be using U.S. taxpayer money to buy much riskier assets that have unproven value and have the potential to bolster the net worth of a select few investors who own the coins. That’s all the more problematic to those who want to axe government spending by trillions of dollars, in support of
Elon Musk’s cost-cutting mission at the so-called Department of Government Efficiency.
“Taxation is theft,” wrote Joe Lonsdale, founder of venture firm 8VC and a vocal Trump supporter, in a
post on X. “It should be kept to a minimum. It’s wrong to steal my money for grift on the left; it’s also wrong to tax me for crypto bro schemes.”
David Sacks, the venture capitalist who was
tapped by Trump to be the “White House AI and crypto czar,” took exception to Lonsdale’s comment, suggesting it’s premature to jump to any conclusions. Sacks and Lonsdale are part of the same conservative circle in the tech world, with Musk and Peter Thiel at the center.
“Nobody announced a tax or a spending program,” Sacks
wrote, in response to Lonsdale’s post. “Maybe you should wait to find out what’s actually being proposed.”
The White House didn’t respond to a request for comment.
But Lonsdale was far from alone.
Naval Ravikant, a longtime tech investor and early crypto evangelist,
wrote after the announcement that, “The US taxpayer should not be exit liquidity for cryptocurrencies that are decentralized in name only.” And Vinny Lingham, creator of blockchain startup Civic and a big crypto influencer,
wrote, “Call me old fashioned but I don’t think the government should be pumping our crypto bags with taxpayer money while we are running a near $2trn deficit.”
Agreement across the industry
A major Trump supporter and big name in crypto joined the chorus on Monday. Billionaire bitcoin investor Tyler Winklevoss, who wrote just before the November election that you should vote for Trump “if you care about the future of crypto, free speech, justice, liberty, and democracy,” came out against the president’s crypto reserve plan.
“I have nothing against XRP, SOL, or ADA but I do not think they are suitable for a Strategic Reserve,” Winklevoss
wrote. “Only one digital asset in the world right now meets the bar and that digital asset is bitcoin.”
David Marcus, the former head of Facebook’s failed crypto project, suggested that the majority of his peers in the crypto community have the same view.
“Most—if not all—of the non-conflicted industry leaders are agreeing about this,” Marcus wrote, in reposting Winklevoss’ comment.
Marcus, who’s now CEO of payments infrastructure startup Lightspark,
declared in July that he was “crossing the Rubicon” and shifting his support to Trump and away from Democrats.
Anthony Pompliano, a loud pro-Trump voice in crypto investing, committed over 1,500 words in his
newsletter on Monday to the topic. He says Trump is willing to propose an agenda of buying risky tokens on behalf of the U.S. because the wrong people got to him.
“We watched crypto projects, lobbyists, and special interest groups co-opt the President of the United States,” Pompliano wrote. “They told the President that any crypto-related reserve should hold tokens that were ‘made in America.’ This pitch was the perfect trap for a President who ran on the America First agenda.”
Some of the wrath online was directed specifically at Sacks, who touted and backed various cryptocurrencies as a VC prior to joining the Trump administration, and whose firm, Craft Ventures, is an investor in crypto index fund manager
Bitwise.
Sacks wrote in a
post on X that he sold all of his crypto, including bitcoin, ether and SOL, before taking on his new role and “will provide an update at the end of the ethics process.”
By late afternoon Monday, crypto prices had staged a
dramatic reversal from their weekend rally that followed Trump’s announcement. Bitcoin fell about 9%, while ether slid 15%. XRP and SOL dropped even more.
The slide appeared tied to President Trump’s confirmation of forthcoming tariffs, which hammered risky assets across the board and sent the Nasdaq down almost 3% at the close of trading.
There were some voices in crypto who were less willing to publicly slam Trump’s reserve plan.
Michael Saylor, the chairman of
Strategy, which has effectively emerged as a bitcoin proxy due to its roughly $43 billion stash, told CNBC on Monday that he wasn’t surprised about Trump’s decision to include additional cryptocurrencies.
“There’s no way to interpret this other than this is bullish for bitcoin and bullish for the entire U.S. crypto industry,” Saylor said. “I believe the best thing for the country is to move forward with an enlightened progressive policy toward digital assets.”
Jonathan Jachym, global head of policy and government relations at Kraken, told CNBC that the crypto exchange is “encouraged to see that announcement” and that it shows the president is “staying true to commitments.”
Even among the skeptics, Trump doesn’t appear to be losing broader support for his agenda just because of this one announcement. Backers like Lonsdale have been quick to post about other matters, complimenting actions taken by Defense Secretary Pete Hegseth and Trump for pressuring Mexican drug cartels.
But coming just six weeks into Trump’s second administration, the reaction shows how quickly the outrage machine can activate when a proposal touches the nerve of a critical group of supporters. The debate adds interest to Trump’s first White House Crypto Summit on Friday, when investors will eagerly be awaiting more details.
As Sacks wrote on March 2, in his
first post about the announcement of the strategic reserve, “More to come at the Summit.”
