In a move that could reshape the relationship between the US government and the cryptocurrency industry, President-elect Donald Trump is reportedly on the verge of nominating crypto enthusiast and hedge fund manager Scott Bessent as his Treasury Secretary.
If confirmed by the Senate, Bessent would become the first Treasury chief to openly embrace digital assets, placing a proponent of the technology that aims to upend traditional finance in charge of the very system it seeks to disrupt. The selection caps a remarkably swift evolution for crypto, from a fringe technology to a force with a seat at the highest levels of economic policymaking.
From Soros to Crypto
Bessent, who currently heads macro investment firm Key Square Group, cut his teeth working for legendary investor George Soros three decades ago. As The Wall Street Journal notes, he played a pivotal role in Soros’ famous bet against the British pound that netted over $1 billion in profits when the currency crashed in 1992.
But in recent years, Bessent’s attention has turned to Bitcoin and its digital brethren. Speaking to Fox Business in July, he gushed about the potential he sees in the nascent asset class:
“I’ve been thrilled with how [Trump has] embraced crypto, and I think it fits very well with the Republican Party – with its ethos. Crypto is freedom, and crypto is here to stay. Crypto appeals to young people, to people who have not participated in markets.”
Scott Bessent, July 2024
A Changing of the Financial Guard
Bessent’s expected nomination marks a stark contrast from the current Treasury Secretary, former Federal Reserve Chair Janet Yellen, who has struck a more cautious tone on crypto. While acknowledging the technology’s potential benefits, Yellen has repeatedly warned about the risks posed by the speculative and largely unregulated digital asset markets.
Under Bessent, the Treasury Department would likely take a more hands-off approach, embracing the decentralized ethos at the heart of crypto and allowing the industry to develop with minimal government interference. This could mean a pullback in efforts to tighten rules around cryptocurrency exchanges, stablecoins, and other key parts of the ecosystem.
Not the Only Crypto Connection
Bessent isn’t the only crypto-connected figure in the mix for a top economic post under Trump. According to sources close to the transition, Howard Lutnick, the CEO of financial services firm Cantor Fitzgerald, was also under consideration for Treasury Secretary before being tapped as Commerce Secretary.
Lutnick has helped manage the massive trove of US Treasury bonds that back the popular stablecoin Tether (USDT) since 2021. His firm’s work for Tether, the largest stablecoin issuer, highlights the increasingly close ties between traditional finance and the upstart crypto industry.
Regulatory Reckoning Looms
While crypto advocates may cheer Bessent’s selection, his nomination is sure to draw scrutiny from lawmakers wary of the freewheeling digital asset space. Expect heated confirmation hearings centered on the potential risks to financial stability and consumer protection posed by the rapid growth of crypto.
Bessent will likely argue that crypto’s benefits outweigh its dangers and that heavy-handed regulation risks stifling innovation and driving the industry overseas. But he’ll face pressure to detail how his Treasury Department would work to prevent fraud, manipulation, and other abuses rampant in the crypto Wild West.
Regardless of how those battles play out, one thing is clear: The era of crypto being a political and economic afterthought is over. With Bessent poised to take the financial reins, digital assets have undeniably arrived at the center of power.
