After Trump pledges to make U.S. a ‘crypto capital,’ Paul Krugman calls crypto a ‘Ponzi scheme’

US economist Paul Krugman has criticized former president Donald Trump and vice president JD Vance’s interest in cryptocurrencies, describing digital assets as a “Ponzi scheme” with limited economic value.

Trump recently received enthusiastic shouts from bitcoiners at the annual Bitcoin Conference 2024 in Nashville, Tennessee, where he promised to support a veritable wish list of demands from the crypto industry in his headline speech. Not only did Trump promise to turn the United States into a “crypto capital,” he also vowed to fire Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC) — an act that no president can do — and vowed to create a strategic national crypto stockpile. “The rules are going to be written by people who love your industry, not by people who hate your industry,” Trump assured crypto investors.

Trump’s opponent, Vice President Kamala Harris, was also invited to speak at the Bitcoin Conference 2024 but chose not to. However, Harris and President Joe Biden’s teams have conducted a study in recent weeks on the cryptocurrency sector, which has emerged as a big-spending sector in the 2024 election cycle.

Crypto PACs have poured millions of dollars into campaigns for pro-crypto candidates this year. Trump has lured wealthy crypto donors to private events in Nashville for $800,000 a person and raised $21 million for his presidential campaign while speaking to crypto donors in Washington who are potentially looking to influence bitcoin policies.

But Trump’s aggressive fundraising from the crypto industry has raised suspicions. “The reality is that bitcoin, which was introduced 15 years ago, a century ago in technology time, remains economically useless,” Krugman said of Trump’s move into crypto. “The few exceptions to its uselessness are money laundering and extortion.”

Krugman also called Trump’s proposal to stockpile Bitcoin “a government bailout of a scandal-ridden, value-destroying, and environmentally destructive industry.”

BREAKING: Democratic politicians have written a letter to the DNC, asking the party to distance itself from Elizabeth Warren’s anti-bitcoin policies.

This is likely a response to polling data, the GOP’s pro-Bitcoin policies, and President Trump’s speech. @BitcoinConf pic.twitter.com/GSvZQAjOCu

— Pierre Rochard (@BitcoinPierre) July 27, 2024

Despite the criticism, several pro-crypto Democratic congressmen recently sent a letter to the Democratic National Committee calling on their party to change its stance on digital assets.

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Democrats say crypto and blockchain technologies have a major impact in securing victories up and down the ballot letter“It is imperative that the party’s platform reflects the potential benefits of digital assets and blockchain technology.”

Democrats like Massachusetts Senator Elizabeth Warren have spoken out against cryptocurrencies, describing laws that would regulate the industry and highlighting links between cryptocurrencies and the illegal drug trade.