Former President Donald Trump weighed in on the booming cryptocurrency movement, reiterating his concerns that rapidly proliferating digital coins pose a threat to the U.S. dollar’s (DX-Y) status as a global reserve currency.
In fact, Trump believes that China’s recent move to ban crypto is a warning shot to the U.S. to protect its currency, he told Yahoo Finance in a wide-raging interview about the economy, and his potential aspirations for the next general election.
He added that Chinese president Xi Jinping wants to create its own cryptocurrency to dominate global markets, in a bid to overtake the U.S. dollar as the world’s leading currency. The former president warned that the U.S. needs to be “very careful” going forward.
“I’m a big fan of our currency and I don’t want to have other currencies coming out and hurting or demeaning the dollar in any way,” Trump said. He invoked the credibility of the global financial architecture, in which the greenback is a fulcrum.
“If you look at a monetary system based on the dollar, if you start losing credibility, all of a sudden you’re going to lose that strong monetary system,” he said. “We have to be very careful about that.”
His remarks come amid a widening debate about regulating crypto, where market capitalizations of blockchain-based units like bitcoin (BTC-USD), Ethereum (ETH-USD), Cardano (ADA-USD), Dogecoin (DOGE-USD) and Solana (SOL1-USD) are soaring as new buyers pile in.
Officials are warning that cryptocurrencies need to be regulated to protect investors, and guard against runs on the U.S. financial system.
Trump’s comments echoed what many proponents have argued is the central appeal of digital currencies. They have advanced the idea of freely-traded, decentralized crypto challenging fiat currencies — hobbled by debt-fueled government spending and vulnerable to soaring inflation that erodes their value.
The former president has voiced skepticism about the sustainability of cryptocurrencies. In a recent interview with the Fox Business Network, Trump said he thinks cryptocurrencies hurt the U.S. dollar and are a disaster waiting to happen.
However, some in the U.S. government see China’s actions as a net gain for America. Republican Senator Pat Toomey has called China’s authoritarian crackdown on crypto a big opportunity for the U.S.’s crypto playing field. “It’s also a reminder of our huge structural advantage over China,” the senator tweeted recently.
Separately, the acting Comptroller of the currency, Michael Hsu, told Yahoo Finance in an exclusive interview last week that the U.S. is headed for a financial crisis if officials don’t impose regulations on crypto soon.
Meanwhile, Securities and Exchange Commission Chair Gary Gensler also warned last week that cryptocurrency investors are likely to get hurt if the space isn’t regulated with rules that protect against fraud and manipulation.
China’s crypto power grab
China recently deemed all cryptocurrency activities – whether trading, derivatives or token issuance as illegal. The ban marks China’s most sweeping action since 2013 to rein in crypto use in its economy, after banning cryptocurrency exchanges in 2017 and cracking down crypto mining this summer.
Beijing’s actions come as authorities create their own government digital currency and look to maintain control over its economy, analysts say.
“China wants centralized control of blockchain,” says Mark Palmer, digital assets analyst for BTIG.
“What’s important to note is that while it would be challenging for the Chinese government to trace various cryptocurrency to owners, have no doubt that CBDC [central banking digital coins] will be designed to maximize the central bank’s ability to monitor CBDC and Chinese citizens’ transactions,” he added.
For more information about cryptocurrency, check out:
Dogecoin, what is it? How to buy it
Ethereum: What is it and how do you invest in it?
The top 21 crypto leaders to watch in the back half of 2021
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