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America\u2019s first \u2018crypto president\u2019 is assembling the first \u2018crypto Cabinet\u2019 and establishing a brand new pseudo-department named after a dog-themed memecoin. What could possibly go wrong?<\/p>\n
On November 12, U.S. president-elect Donald Trump announced that \u201cthe Great Elon Musk and American Patriot Vivek Ramaswamy\u201d will co-lead the Department of Government Efficiency (D.O.G.E.). The new \u2018department\u2019 will allegedly help Trump \u201cdismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies.\u201d<\/p>\n
Technically speaking, D.O.G.E. won\u2019t be an official department, instead providing \u201cadvice and guidance outside of Government.\u201d But D.O.G.E. will \u201cpartner with the White House and Office of Management & Budget to drive large scale structural reform.\u201d<\/p>\n
It\u2019s somewhat ironic that a \u2018department\u2019 tasked with improving efficiency would require not one but two<\/em> heads to run it. There\u2019s also the strong likelihood that one of these two headstrong individuals will quit after repeatedly butting heads with the other over which one thinks Trump is dreamier, but time will tell.<\/p>\n D.O.G.E. has been given a mandate to finish its work by July 4, 2026, which Trump claims will be \u201cthe perfect gift to America on the 250th\u00a0Anniversary of The Declaration of Independence.\u201d But that date is also ahead of that year\u2019s mid-term elections. Historically, the party in power tends to lose seats in Congress in the mid-terms, so D.O.G.E. needs to finish its work before the Democrats get a chance to bust up the Republicans\u2019 unified control of government.<\/p>\n Musk has long been a supporter of the BTC and DOGE (Dogecoin) tokens, disparaging the rest of \u2018crypto\u2019 as \u201ca sideshow.\u201d DOGE\u2019s fiat value has more than doubled since Trump\u2019s re-election\u2014quadrupling since mid-September\u2014based partly on Musk\u2019s highly public embrace of Trump during the campaign along with confirmation that D.O.G.E. is actually happening.<\/p>\n Trump\u2019s official campaign website has already begun selling T-shirts emblazoned with the name D.O.G.E. alongside photos of himself and Musk\u2014notably, Ramaswamy didn\u2019t make the cut\u2014against a backdrop of the planet Mars. Behind them is the image of a Shiba Inu dog, the type featured in the meme on which Dogecoin was based (the token was created as a joke to mock the lack of utility in most post-Bitcoin \u2018crypto\u2019 projects). Musk celebrated the D.O.G.E. announcement by tweeting a logo featuring a similar dog.<\/p>\n Trump\u2019s pledge to fire Gary Gensler, current chair of the Securities and Exchange Commission (SEC), \u201con day one\u201d of his second term may also be playing a role in DOGE\u2019s rise. Bloomberg analyst Eric Balchunas claimed this week that a DOGE-based exchange-traded fund (ETF) could be in the offing once Gensler is shown the door.<\/p>\n Gone Gary gone<\/strong><\/p>\n Trump\u2019s choice to replace Gensler hasn\u2019t been announced, although there are a number of leading contenders, nearly all of which hold pro-crypto positions. Topping this leaderboard is Dan Gallagher, chief legal officer at crypto-friendly online brokerage Robinhood (NASDAQ: HOOD) and a former SEC commissioner.<\/p>\n Another former SEC commissioner reportedly under consideration is Paul Atkins, whose bona fides include serving as co-chair of the Chamber of Digital Commerce\u2019s Token Alliance. Current SEC commissioners Mark Uyeda and Hester \u2018Crypto Mom\u2019 Peirce, both of whom vocally opposed Gensler\u2019s anti-crypto campaigns, are also reportedly under consideration, although Peirce is said to be ambivalent about succeeding Gensler.<\/p>\n Other candidates include two former Commodity Futures Trading Commission (CFTC) chairs: Chris \u2018CryptoDad\u2019 Giancarlo and Heath Tarbert (the latter currently working for USDC stablecoin-issuer Circle).<\/p>\n Several high-profile attorneys, including Kramer Levin Naftalis & Frankel partner Richard Farley and Wilkie Farr & Gallagher\u2019s Robert Stebbins, are also being vetted. Neither Farley nor Stebbins have staked out a firm position on \u2018crypto,\u2019 although Stebbins works at the same firm as Giancarlo.<\/p>\n Another lawyer in the mix is Kirkland & Ellis partner Norm Champ, a five-year SEC veteran who once headed up its division of investment management. In 2018, three years after leaving the SEC, Champ said federal agencies\u2019 official crypto policies were \u201cclear as mud,\u201d creating \u201cuncertainty\u201d for investors.<\/p>\n Is Trump flat out trolling us?<\/strong><\/p>\n Trump raised eyebrows on November 12 when he announced his plan to install Pete Hegseth, a military veteran and Fox News host, as his new Secretary of Defense.<\/p>\n Hegseth is a noted \u2018crypto\u2019 supporter, recently declaring that Trump was \u201cmaking Bitcoin great again,\u201d but he\u2019s long touted his status as \u2018a Bitcoin guy.\u2019 A couple of years ago, Hegseth copped to having transferred some of his assets to the Celsius Network, the digital asset lending platform\/Ponzi scheme that went bankrupt in the great \u2018crypto winter\u2019 of 2022.<\/p>\n Eyebrows shot further skyward on November 13, when Trump named Rep. Matt Gaetz (R-FL) as his choice to lead the Department of Justice (DOJ). Gaetz was previously investigated<\/em> by the DOJ over sex-trafficking allegations but the probe was dropped in early 2023 without any charges being filed.<\/p>\n Gaetz\u2019s nomination was a major shock to many on Capitol Hill, including many of his Republican colleagues, some of whom expressed doubt that Gaetz would survive a Senate hearing into his qualifications for the Attorney General role. That may be why Trump recently demanded that the Senate approve his Cabinet nominations via recess appointments, aka without Senate scrutiny.<\/p>\n Gaetz is very pro-crypto\u2014although he\u2019s reportedly more of a Venmo guy\u2014introducing a bill this summer that sought to amend the Internal Revenue Code (IRC) to permit Americans to pay their tax bills with BTC. Gaetz also attended the second inauguration of El Salvador\u2019s President Nayib Bukele, the \u2018cool dictator\u2019 who made BTC legal tender in his country in 2021 (although outside \u2018Bitcoin Beach,\u2019 no one in El Salvador accepts BTC as payment).<\/p>\n Wednesday also saw Trump named former Congresswoman Tulsi Gabbard as his choice for Director of National Intelligence. In 2019, Gabbard, a former Democrat who took a political right turn, co-sponsored the Token Taxonomy Act, which would have kept the SEC\u2019s filthy mitts off most prominent tokens.<\/p>\n Gabbard also spoke at the BTC Miami conference in 2023 and at this year\u2019s event in Nashville. She has spoken out against central bank digital currencies (CBDC) and, this spring, told some podcast hosts that people love BTC because it\u2019s \u201can independent, transparent form of currency that is not under government control.\u201d<\/p>\n Trump also appointed Steven Witkoff as his new Special Envoy to the Middle East. Witkoff is a partner in Trump\u2019s decentralized finance (DeFi) project World Liberty Financial (WLF). WLF launched its \u2018governance token\u2019 sale in mid-October, but the response was underwhelming, leading the project to revise its sales target from $300 million to just $30 million. The project has enjoyed a small amount of renewed interest post-election, but total sales are still only two-thirds of that reduced figure.<\/p>\n Trump didn\u2019t appoint him, but on November 13, Sen. John Thune (R-SD) won the vote to replace the outgoing Mitch McConnell (R-KY) as Senate Majority Leader. In 2022, Thune co-sponsored the Digital Commodities Consumer Protection Act (DCCPA), which would have given the CFTC the primary role of regulating prominent tokens such as BTC and ETH. Earlier this year, Thune voted to overturn SAB 121, an SEC bulletin that limited banks\u2019 ability to custody digital assets.<\/p>\n Tethery Treasury<\/strong><\/p>\n Trump has yet to announce a new Treasury secretary, although the digital asset sector is hoping it turns out to be Scott Bessent, founder\/CEO of the Key Square Group hedge fund. Bessent recently claimed to be \u201cexcited about (Trump\u2019s) embrace of crypto\u201d and said \u201cthe crypto economy is here to stay.\u201d<\/p>\n A more longshot candidate for Treasury secretary is Howard Lutnick, CEO of Wall Street financial services firm Cantor Fitzgerald\u00a0(NASDAQ: ZCFITX). Lutnick is also co-chair of Trump\u2019s transition team, tasked with finding suitable candidates to help lead Trump\u2019s second term, but Lutnick has reportedly been \u201ccampaigning hard\u201d behind the scenes for the Treasury gig.<\/p>\n Lutnick claims to be the custodian of the Treasury bills allegedly owned by Tether, issuer of the market-leading USDT stablecoin (the post-election market cap of which has soared by around $6 billion to over $126.5 billion).<\/p>\n Some Treasury officials reportedly see Lutnick\u2019s Tether ties as problematic if he faced a Senate confirmation hearing, although that wouldn\u2019t be an issue should the Senate play ball with Trump\u2019s recess appointment demands.<\/p>\n There\u2019s also the not-insignificant matter that both the Treasury and the DOJ are rumored to be preparing charges against Tether for, among other things, facilitating violations of economic sanctions imposed on certain individuals\/entities by Treasury\u2019s Office of Foreign Assets Control (OFAC) and facilitating transactions by Mexican drug cartels and terrorist groups. The Washington Post recently confirmed rumors of the probe, following earlier reporting by the Wall Street Journal.<\/p>\n Right said Fed<\/strong><\/p>\n It remains to be seen whether Trump will attempt to replace Federal Reserve chairman Jerome Powell, who was appointed by Trump in November 2017. The pair increasingly sparred toward the end of Trump\u2019s first term and Powell has made it clear he won\u2019t submit his resignation should Trump demand it this time around. Politico recently reported that Trump is unlikely to want to upset Wall Street by tossing a grenade into the surging stock market.<\/p>\n That\u2019s not how Musk would play it. Musk recently retweeted a post by Sen. Mike Lee (R-UT) calling on Trump to scrap the Fed entirely. Lee is a noted \u2018crypto\u2019 supporter who doesn\u2019t think it should be subject to capital gains tax and is also a vocal opponent (like Trump) of CBDCs.<\/p>\n There are 12 Fed governors, including Neel Kashkari, president of the Federal Reserve Bank of Minneapolis. Kashkari has spoken critically of crypto, including at a public meeting in October where he declared that \u201cvery few (crypto-based) transactions are actually happening \u2026 unless people are buying drugs or illegal activities.\u201d Fast forward to this week, and Kashkari was singing a different tune, saying he \u201cwill have an open mind\u201d regarding the future of digital assets.<\/p>\n Who\u2019s HODLing?<\/strong><\/p>\n Several other key figures in Trump\u2019s second term have acknowledged their personal ownership of digital assets. Vice-president-elect J.D. Vance declared \u201cbetween $250,000 and $500,000\u201d worth of BTC earlier this year, an amount that has almost certainly increased since that disclosure.<\/p>\n Rep. Mike Waltz (R-FL), who was announced this week as Trump\u2019s new national security adviser, declared \u201cup to $100,000\u201d in BTC way back in 2021. Again, that number has almost certainly increased in value, assuming Waltz never sold.<\/p>\n Gabbard admitted buying small quantities of ETH and Litecoin in 2017 and has reportedly acquired some BTC since then. Over at D.O.G.E., Musk is a known BTC whale who also owns some DOGE, while Ramaswamy reported holding between $100k-$250k of BTC back in 2023.<\/p>\n Department of Go Away Now<\/strong><\/p>\n One final note regarding Musk, who claimed shortly before the election that he could cut \u201cat least $2 trillion\u201d in federal spending\u2014roughly one-third of the annual budget. Average Americans would have to undergo \u201csome temporary hardship, but it will ensure long-term prosperity.\u201d You know, like Musk\u2019s Tesla, which was spared potentially fatal hardship by leaning hard on billions in federal handouts over the years.<\/p>\n Meanwhile, Ramaswamy has engaged in \u2018thought experiments\u2019 where he randomly fires 75% of federal employees and \u201cnot a thing would have changed for the ordinary American, other than that their government being a lot smaller, spending a lot less money to operate it.\u201d<\/p>\n Listening to Ramaswamy, one can\u2019t help but recall how Musk cut 80% of Twitter\u2019s staff to trim expenses and help pay the $1.2 billion in annual interest on the billions Musk borrowed to buy the platform in 2022. Regular users of the rebranded \u2018X\u2019 will point to how frequently the platform simply doesn\u2019t work, particularly during periods of high usage, like Spaces events with Trump (that Musk tried to blame on DDoS attacks).<\/p>\n Any attempt by Musk to impose the same level of cuts on the government won\u2019t end well. Trump has vowed to institute a lot of very big changes in his second term. He won\u2019t be able to do any of it with a federal bureaucracy that\u2019s no longer capable of performing routine tasks, let alone anything challenging.<\/p>\n Some observers suspect Musk and Ramaswamy could try to replace human staff with technology, including artificial intelligence (AI) systems. But given the faceplants that AI systems still display on a daily basis, this would likely create more problems than it solved. And with less than two years in which to accomplish these feats\u2014or less, according to Elon\u2014there\u2019s no time to work out the kinks.<\/p>\n Trump is under no obligation to act on any of the recommendations that might emerge from D.O.G.E. Indeed, some observers have suggested it\u2019s Trump\u2019s way of giving Musk a title without any real governmental power until Musk either gets bored or simply gets tired of sharing the spotlight with Ramaswamy.<\/p>\n Digital asset operators have long claimed to be seeking only regulatory clarity, but what they really seek is freedom from any and all oversight. If Trump is actually serious about letting Musk et al. cut the federal government to its barest bones, the digital asset sector might actually get what it wants. God help us.<\/p>\n Watch: Bringing the Metanet to life with Teranode<\/p>\n