Trump Signs Executive Order for Crypto-assets

 The deal is done... or is it?

Throughout his career, Trump has been known for leveraging his position to negotiate deals that benefit his personal interests and those of his companies, whether through branding, real estate ventures, or business partnerships. He often seeks to position himself in ways that maximize personal or corporate gain, sometimes at the expense of broader policy goals or public perception.

For example, Trump’s real estate deals have often been structured to create tax advantages or favourable financing terms for his businesses, and his brand has been a central component of his wealth. Even during his presidency, he continued to hold business interests that he did not divest, leading to concerns about conflicts of interest and how his personal wealth could intertwine with policy decisions.

Given this track record, it is crucial to factor in the possibility that his interest in crypto might be influenced by both broader economic strategy and personal financial considerations.

Why the crypto policy shift?

Firstly, crypto investors, companies, and executives made significant contributions to Trump’s 2024 campaign. These financial support could be seen as a motivating factor behind his pivot toward pro-crypto policies. For Trump, these donations represent not just support for his political goals, but also an alignment with an industry that has shown potential for explosive growth. The crypto industry is inherently speculative and can be seen as a high-risk, high-reward area - exactly the kind of sector where Trump, with his business background, might see opportunities for personal and political gain. In other words, supporting crypto could be a way to align with wealthy donors, investors, and executives who stand to benefit from an environment that is more favourable to digital assets.

Then, the Trump’s promise to keep 100% of Bitcoin holdings acquired by the U.S. government further emphasizes this financial angle. Given his history of maximizing financial leverage, Trump could see these assets - whether seized or acquired through other means - as potential vehicles for both wealth accumulation and political leverage. Holding a national crypto stockpile could also serve as a way to ensure that the U.S. maintains influence over the global crypto market, an area where Trump might want to position himself as a key figure. If the U.S. government were to amass significant Bitcoin holdings, it could potentially benefit Trump’s network of allies or supporters in the crypto industry.

Many of the individuals appointed to leadership positions under Trump’s potential administration are aligned with pro-crypto ideologies or have close ties to financial sectors with strong crypto interests. Appointing figures such as Scott Bessent (a hedge fund manager with ties to the crypto industry) to lead the Treasury Department signals that Trump is looking to support the financial structures that benefit from cryptocurrency's rise. As Trump himself has seen the financial benefits of maintaining close ties to wealthy business leaders, it is possible that some of his crypto-friendly moves are designed to protect or enhance the interests of key business figures or entities connected to him or his broader political network.

Finally, Trump’s ventures - real estate, branding, and licensing deals - could also potentially benefit from the rise of cryptocurrency. The growing intersection of traditional finance and crypto means that Trump’s companies could eventually tap into blockchain technology, digital payment systems, or other innovations tied to the crypto sector. For example, real estate transactions using crypto could become more common, and Trump’s properties could become key players in this new financial ecosystem. By promoting favourable crypto policies, Trump might be positioning his businesses to capitalize on these trends.

Given Trump’s business history and potential financial entanglements, there is an obvious concern about conflicts of interest. If U.S. policy shifts in favour of crypto, benefiting companies or individuals with ties to Trump, there could be questions about whether his personal financial interests are unduly influencing public policy. 

The fact that crypto executives contributed heavily to his campaign could raise concerns about whether the policy shift is a direct result of those contributions. Critics might argue that the administration is aligning its policies to benefit donors and major players in the crypto space.

If Trump or companies associated with him have financial exposure to cryptocurrencies (either through direct investments or partnerships), there might be concerns that his policies could unfairly favour those assets, especially in light of his past efforts to position himself for personal financial benefit through public office.

By appointing figures like Paul Atkins, who has a history of opposing heavy regulation, Trump could be signalling that his administration is more likely to push for a "hands-off" approach to crypto regulation. While this may benefit the industry by fostering innovation, it could also benefit Trump’s financial interests if he has personal stakes in businesses that stand to gain from less regulatory oversight.

While the executive order reflects a broader strategic interest in fostering crypto innovation and securing U.S. leadership in the digital asset space, it is important to acknowledge the potential financial motivations driving these decisions. Trump’s history as a dealmaker who leverages his position to benefit personally means that the shift towards pro-crypto policies may not solely be motivated by ideological or economic factors related to national interest. It is possible that personal financial interests, donor support, and the potential for future wealth creation could be influencing his stance on crypto.

In this light, Trump’s pro-crypto policies may not just be about promoting the U.S. as a leader in blockchain innovation but also about creating an environment where his financial networks can continue to thrive. Given his track record, it would be prudent to critically assess whether these policies are more about advancing personal or political gain than about the broader economic benefits they claim to offer.

CPF Changes for an Ageing Population

Prime Minister Lee unveiled quite a few proposed changes to the Central Provident Fund (CPF) Scheme during his national day rally speech and the changes have been debated in Parliament recently.

Quite a few changes have been proposed to address the ageing population the country is facing. Top of the list are measures to encourage re-employment of older workers, followed by increases in the CPF interest rates and lastly, and most controversial, measures to make savings last for life expectancy.

While official statistics show that more people are living till an older age, the cold hard facts do nothing to address the perceptions that these statistics do not apply to the individual. The common view on the ground is still that the government has once again moved the goalposts and made our money out of reach; everytime one moves near the markers where we can lay our hands on OUR money, the criteria is moved so that the marker moves that slightly further out of reach... Will people ever live to enjoy the fruits of their many years of labour, to pocket the money that had been kept out of their reach for decades.

Already, today's retirement age at 62 is being moved to 67. The age of 67 is definitely not cast in stone. In another decade or 2, will it be possible that the retirement age is moved even further to 70 years old or beyond? I doubt it not. It may even eventually reach a stage where retirement age is scrapped and people are given the option to work till the day they drop dead.

What about increasing the interest rates on CPF savings? An additional one percent on the first $60,000 in the CPF accounts will definitely be welcomed but the catch is that the initial $20,000 of the Ordinary Account can no longer be invested under the CPF Investment Scheme for higher returns. Furthermore, the Special, Retirement and Medisave Accounts (SRMA) will no longer offer fixed interest rates but instead be pegged to a long term bond rate.

Not being able to invest the first $20,000 of the OA is likely to impact the potential returns that can be obtained by those who are financially savvy. Utilising the money to buy into stable dividend-paying blue chips is highly likely to yield returns beyond 3.5%. The long term bond rate is also an unknown. Will it better the 4% that CPF currently pays on the SRMA? While past data appears to indicate that CPF members will be able to expect similar or better returns, the standard disclaimer that appears on brochures of financial products must be kept in mind - Past performance are not necessarily indicative of future performance.

The one proposal that really got everyone talking is that of making longevity insurance compulsory. While this is still tentative and a committee had been setup to look at it, I really hope that the committee will eventually propose that it not be implemented. The basic idea is to get every CPF member to buy into an annuity scheme so that those who do live beyond 85 will be guranteed an income for life. Yet again, there is a catch to this. The proposal in its current form will see CPF members paying for the annuity and getting nothing back if they die before the age of 85. Why should the government stipulate how I should use MY money to subsidise others whom had not planned for their own longevity? The intention behind CPF was that individuals will be self sufficient and fund their OWN retirement with the government stepping in to help those who are unable to help themselves. The oft quoted slippery slope of welfare appears to be being tested here. While sounding selfish, there is no reason why I will want to fund the longevity costs of someone whom I do not know. If I die, my assets should be directed to the benefit of those related to me, those whom I will be most concerned about.

Personally, with the exception of the longevity insurance, I am fine with the CPF changes proposed. In reality, CPF is a retirement scheme that will not suffice to fund a comfortable retirement. For those who can, they must make alternative plans to ensure a reasonable standard of living upon retirement. Eventually, with the constantly moving criteria, being able to lay our hands on the CPF money needs to be considered a bonus. But! DO NOT dictate that I should spend my hard earned money funding the needs of someone whom had not taken pains to need his own retirement needs.