I own a small amount of crypto assets in my portfolio, so I am not against this asset class per se. I do object to the federal government starting their own reserve fund.

Crypto is a relatively new asset and we are still in the beginning stages of exploring how it works as an asset for investing. We have already determined that it does not work as a currency in the U.S. The primary reason is that you must declare capital gains or losses with each transaction.

The government should not pick winners and losers. Right now, the Trump administration wants to invest in five crypto assets. Over time tremendous pressure and lobbying will take place to add to or replace those five tokens. 

The government should not be acting as a portfolio manager. Unlike the Strategic Petroleum Reserve, there is no intrinsic value in crypto assets. We would be investing in it primarily in the hopes of increasing prices. But why crypto and not a basket of top 100 stocks?

Let’s say that the best-case scenario happens, and this basket of assets is up several fold over a few years. Then what? Do we sell the assets and take a profit? Do the taxpayers get a dividend? The U.S. does not publish an annual balance sheet, so the fact that the government made a paper profit is nice but irrelevant.

Is it a rainy-day fund? I’m very skeptical of this approach given that Presidents of both parties now frequently declare emergencies whenever it suits their agenda. It would be too tempting to sell whenever the political winds are convenient rather than when it best suits the country’s long-term interest. 

There is also the question as regards Bitcoin’s largest holder of the token. It is widely agreed that if the anonymous founder Satoshi Nakamoto would ever start to sell his holdings that Bitcoin prices would come under tremendous pressure. The fact that Nakamoto may or may not be a friend of the U.S. is too risky.

The U.S. needs to look at ways to increase revenues, not to spend more money on a speculative asset.

We should explore monetizing the 650 million acres that the U.S. government owns. Perhaps the U.S. could offer land trusts on federal land that the average taxpayer could take advantage of.

If we are determined to get into the digital currency business, the U.S. could offer its own token backed by its gold holdings. The U.S. owns approximately 8100 tons of gold. Selling tokens based on a part of that could raise tens of billions of dollars for the treasury.

Let’s have laws and rules that are clear for crypto investors and leave speculation and investing to individuals, not the government.

Image: QuoteInspector.com