The Economist: Crypto Assets have become the ultimate "swamp assets"

If you can't beat them, join them.

If you can't drain the swamp, become the swamp.

"Drain the Swamp" is Trump's core campaign promise, meaning to eliminate political corruption and special interest groups in Washington. However, on the issue of cryptocurrency, he seems to be digging a new, more insidious, and potentially more dangerous "digital swamp" with his own hands.

Once, the main character of the crypto world was Satoshi Nakamoto, but now, the main character is the U.S. president who claims that "no one understands better than I do." Trump once asserted that cryptocurrencies are "extremely volatile and have no support"; now he has transformed and claims that the crypto community is "filled with the spirit of the founding era, exciting."

Behind this dramatic turn, it is not just a change in personal attitude, but it also reflects how cryptocurrency – once the "dragon-slaying youth" carrying subversion and ideals – has gradually become "swamp-like," even being transformed into a "philosopher's stone" that some power players use to turn stone into gold.

We are at a paradoxical moment in time: a technology that claims to be "decentralized" and free from power control is now flirting with the highest levels of political power, even deeply entwined with it. This not only betrays its original intention but could also lead to an existential crisis that goes beyond the financial realm.

The cover article of the latest issue of The Economist states that cryptocurrency has become the ultimate "swamp asset." In a sense, is this a victory of the revolution?

Today, let's talk about why the domineering president fell in love with cryptocurrency, the reversals behind this, the game of money and power, and the crisis.

1. Trump's "Crypto Feast": A Carefully Orchestrated "Gold-Plated Game"

The climax of the story was undoubtedly the planned dinner on May 22, 2025. A few weeks earlier, the Meme coin released by Trump himself - $TRUMP, was on the verge of collapsing to zero, almost becoming a joke in the cryptocurrency world.

However, the personal "endorsement" of the president acted like a strong boost, instantly giving it a certain "real value." The founding team of $TRUMP Coin has initiated a "pilgrimage" invitation: holders of coins ranked in the top 220 can enjoy the "honor" of dining with Trump, and the top 25 holders can participate in a VIP reception for an "intimate contact" with the president.

Once the news broke, the cryptocurrency world went wild, and a buying frenzy ensued. The final list of "lucky winners" painted a bizarre picture of diverse individuals: there were wealthy crypto tycoons, fervent MAGA (Make America Great Again) supporters, and pure speculators.

A person plans to fly from Asia to the United States specifically to attract investment for his blockchain project that aims to "promote the next generation of Meme culture"; another is a Trump supporter from New York who once spent a fortune on cryptocurrency to buy a Trump-branded watch; and there is even a mysterious figure wearing a mask who presents himself as a "cyber detective" and specializes in tracking stolen digital assets. Blockchain data ruthlessly reveals that in the VIP seats, the presence of foreigners is not uncommon.

This seemingly star-studded banquet is undoubtedly filled with controversy. Supervisory organizations of the U.S. government have condemned it, pointing out that it may violate federal regulations prohibiting officials from receiving gifts. Moreover, if individuals with ties to foreign governments are present at the dinner, it could even breach the solemn Emoluments Clause in the U.S. Constitution, which strictly forbids federal officials from accepting any gifts of property from foreign governments. The former special advisor on ethics and government reform in the Obama administration sharply commented: "This is a moral nightmare."

Just four months into Trump's second term, his family is pushing the expansion of private business interests at an unprecedented speed and breadth. The Meme coin dinner is just the tip of the iceberg. Their involvement in the crypto space goes far beyond that: a Bitcoin mining company and a project launched by his son called "World Liberty Financial" are both clearly stamped with the Trump family's mark.

Critics have sharply pointed out that, against the backdrop of Trump's significant relaxation of cryptocurrency regulations, these actions constitute a serious conflict of interest. The White House spokesperson downplayed the situation, stating that the understanding king always prioritizes the interests of the American people, and the Meme coin dinner is considered a "private business activity" unrelated to the official White House. If one believes this, it can only be said that Americans are naive.

This is not just a dinner, but more like a meticulously orchestrated "gold-plated game." The transaction fees of $TRUMP coins, as well as the tokens reportedly still held by confidants worth approximately $10 billion, illustrate the true winners of this game.

Data from blockchain analysis company Chainalysis shows that while 58 investors have profited over $10 million from this coin, approximately 764,000 wallets have incurred losses, the vast majority of which are likely retail investors attracted by the myth of "getting rich overnight." While the elite divide the profits amidst toasts, the dreams of countless ordinary investors may turn into bubbles.

2. The "Swampification" of Cryptocurrency: From "Dragon Slayer" to "The Dragon Itself"

(1) A Shattered Utopia: The Fading of Ideals and the Departure from Original Intent

Looking back at the origins of cryptocurrency, how many exciting declarations have we heard? In 2009, Bitcoin emerged, and a movement filled with utopian colors, shining with anti-authoritarian brilliance, arose. Early cryptocurrency believers harbored noble and even great goals: they yearned to completely overturn the existing financial system, protecting personal property from the erosion of inflation and unjust confiscation. They dreamed of taking power away from large financial institutions and handing it to every ordinary investor.

In their eyes, cryptocurrency is not just an asset, but a liberating technology, a tool that can bring about a fairer and more transparent world. Cryptocurrency evangelist Andreas Antonopoulos once passionately declared: "Bitcoin is disruption. The impact it brings is so great that most people still find it hard to imagine... a complete disruption. A fully decentralized currency, without borders... Bitcoin is created for the six billion unbanked people worldwide."

At that time, the crypto world was filled with a kind of "tech geek" idealism. It attempted to play multiple roles at once: a value storage tool, a high-return investment, and a financial technology that allows people to transfer money peer-to-peer without going through government and bank-controlled channels. It promised a certain degree of anonymity and privacy protection, so that people wouldn’t have to feel like "Uncle Sam" is watching over them all the time. Fundamentally, it offered an option to step out of the traditional system, as early supporters were filled with extreme distrust of the existing financial system.

However, over the course of more than a decade, reality has drifted further away from the initial ideals. It is evident that the ideals of cryptocurrency are constantly "shrinking". Unless you are a die-hard crypto believer, you probably no longer think that cryptocurrency can replace the global financial system, end the dominance of the US dollar, euro, and yen, or make the banking system disappear completely.

(2) The reality of mud and sand: The birth of "swamp assets"

The current state of cryptocurrency often presents a different picture. It has become a highly speculative tool, with people buying and holding, expecting its price to rise; or shorting, expecting its price to fall; or investing in certain crypto companies, hoping they can outperform the market.

It has also been heavily criticized for playing a fundamental role in black market transactions, widely used in illegal activities such as human trafficking, drug trading, and terrorism financing. Many cryptocurrency activities choose to operate outside of the United States jurisdiction precisely because the relevant companies are unwilling or unable to comply with U.S. securities and banking regulations.

"Swamp Assets" - a concept introduced by The Economist, aptly summarizes the current awkward situation of cryptocurrencies. An industry that once dreamed of being "politics-free" has now become synonymous with "self-serving interests," developing a "dirty relationship" with the U.S. government administrative departments that far surpasses that of Wall Street or any other industry. This is undoubtedly a huge irony.

The giants of the cryptocurrency industry are pouring billions of dollars into political lobbying to maintain friendly legislators and ruthlessly attack opponents who try to regulate them. The president's sons are peddling their crypto projects around the world, while the president himself engages in quid pro quo with the biggest investors through events like crypto dinners.

The cryptocurrency held by the first family of the United States is now worth billions of dollars, and it may even become the family's largest single source of wealth.

This trend of "swampification" stands in stark contrast to other major economies in the world.

In recent years, countries and regions such as the EU, Japan, Singapore, Switzerland, and the UAE have successfully provided new regulatory clarity for digital assets without the rampant conflicts of interest that have appeared elsewhere. In developing countries where government expropriations are common, inflation is high, and the risks of currency devaluation are real, cryptocurrencies still play a role to some extent as envisioned by early idealists.

Ironically, all of this is happening against the backdrop of the underlying technology of digital assets maturing. Speculative behavior is still rampant, but mainstream financial companies and tech giants are beginning to take cryptocurrencies more seriously. The process of "tokenization" of real-world assets is accelerating, with traditional financial institutions like BlackRock and Franklin Templeton becoming major issuers of tokenized currency market funds. The application in the payment sector also shows great potential, with companies like Mastercard and Stripe embracing stablecoins.

However, in the United States, a country that should be leading innovation, the cryptocurrency industry seems to have chosen a shortcut that dances with power. They argue that during the Biden administration, due to SEC Chair Gary Gensler's tough stance and frequent enforcement actions, they have no choice but to "fight by any means necessary." Banks, fearing regulatory pressure, dare not provide services to cryptocurrency companies and are hesitant to venture into the field.

This statement has its merits; clarifying the legal status of cryptocurrencies through the courts rather than Congress is indeed inefficient and not entirely fair. However, now, with Trump in power, the regulatory pendulum seems to be swinging violently to the other extreme, and most cases against cryptocurrency companies have been dismissed. Is this a victory for the industry, or does it lay the groundwork for a larger crisis?

3. Why Trump fell in love with crypto: A sweetener or Pandora's box?

Trump's 180-degree turn on cryptocurrency is one of the most striking phenomena in recent American politics. From once stating "I don't like Bitcoin and other cryptocurrencies; they are not money, their value is extremely volatile, and they have no substantial basis" to now declaring that he wants to make the U.S. the "global crypto capital" and an "undisputed Bitcoin superpower," is this a well-considered policy shift or a carefully calculated political and business marriage?

(1) Under the "sugar coating": Why did Trump embrace crypto?

Trump's "crypto preference" is not without basis; the driving forces behind it are complex yet direct:

1. Naked economic interests: This is the most direct and unabashed motive. Trump and his family members have deeply engaged in the investment and operation of cryptocurrencies. Whether it's the $TRUMP meme coin that has made him and his partners a fortune, or the Bitcoin mining company that his two sons have invested in, as well as their majority stake in World Liberty Financial, it all clearly points to the growth of personal wealth. The president and his family are directly profiting from this emerging industry.

2. Realistic political considerations: The crypto community has been described by Trump as "full of the spirit of the founding, exciting." Behind this is a covetousness for the political energy of this group. Cryptocurrency advocates are often young, passionate, and have a certain economic strength. Winning their votes and campaign donations is extremely tempting for any politician. Trump's promise to introduce favorable legislation for crypto and his portrayal of the Biden administration as the "grim reaper" of emerging industries is precisely to cater to the demands of this group.

3. A consistent anti-regulation stance: One of the core policies of the Trump administration is deregulation. The cryptocurrency industry's challenge to the existing financial regulatory framework and its desire for a more lenient environment align with Trump's governance philosophy. Liberating cryptocurrencies from the "constraints" of agencies like the SEC fits into his overall strategy of diminishing the power of regulatory bodies.

4. Self-reinforcement of the "disruptor" image: The anti-establishment and traditional-challenging characteristics inherent in cryptocurrency somewhat align with the "outsider" and "disruptor" image that Trump has always tried to shape. Embracing this field, which is seen as an "outlier" by mainstream finance, may further solidify his appeal among certain voter groups.

(2) "Shell" and "Magic Box": Potential Huge Risks

However, beneath the sugar coating of Trump's "crypto preference" may hide a "bomb" capable of blowing up the entire financial system, or unleash countless disasters from a "Pandora's box." The risks are multidimensional and deep-seated:

1. Systemic risks in the financial system:

Volatility contagion: The nature of cryptocurrency's "extreme volatility, narrative support" has not changed. In the absence of regulation, if it becomes deeply integrated into the mainstream financial system, its inherent instability could infect traditional financial markets through various channels, triggering a systemic crisis. Insiders warn that Bitcoin could become today's credit default swaps (CDS) or subprime mortgage-backed securities (MBS) — the complex and under-regulated financial instruments that sparked the 2008 financial crisis.

Regulatory arbitrage is rampant: financial institutions inherently have the impulse to evade regulation. If the crypto space becomes a new "lawless land", Wall Street firms are likely to leverage this wave of "crypto-friendly policies" to "reshape" their businesses into crypto operations, thereby circumventing the existing regulatory framework aimed at protecting financial stability.

The absurdity and danger of the "strategic Bitcoin reserve": The proposal by the Trump administration to establish a so-called "strategic Bitcoin reserve" plans to use up to $100 billion of public funds to buy cryptocurrencies such as Bitcoin and Ethereum, which has been criticized by experts as "meaningless and even a ridiculously stupid idea."

Unlike oil or pharmaceutical reserves that have actual strategic value, Bitcoin reserves have almost no strategic significance apart from delivering huge profits to the crypto industry. This effectively amounts to putting taxpayers' money into highly speculative assets, with the risks being completely socialized.

A repeat of the 2008 crisis: Once these risks erupt, the impact will extend far beyond the "coin speculators" to all ordinary Americans who have a mortgage, a retirement account, or want to start a business with a loan. Because the entire financial system is built on "trust", it is only a matter of time before the risk of opacity is quietly implanted and regulation is deliberately weakened. What's even more frightening is that the "firewalls" such as the Dodd-Frank Act, which was introduced in response to the crisis, are now being gradually dismantled by the Trump administration.

2. Risk for ordinary investors: Just got out of the fire pit, and into the swamp.

Fraud rampant, losing everything: The cryptocurrency space is filled with various scams and Ponzi schemes. Many companies pop up overnight, targeting those who are not well-versed in finance and technology with extravagant promises. Once defrauded, due to the anonymity and difficulty of tracing cryptocurrencies, losses are almost impossible to recover.

Compared to the layered risk alerts and anti-fraud mechanisms in traditional banking systems, the world of cryptocurrency resembles a "dark jungle." The elderly, veterans, startup owners, and even those simply looking for partners on dating apps can all fall victim to scams, with losses amounting to hundreds of billions of dollars.

The Illusion of "Democratization" and the Lament of Retail Investors: Events like the $TRUMP dinner may superficially seem to provide ordinary people with the opportunity to access top-level power, but behind the scenes, it often leads to the enrichment of a few insiders and significant losses for many retail investors. The frenzy surrounding Meme coins is particularly evident, as their volatile nature causes most latecomers to become "exit buyers."

3. National-Level Corruption and Crisis:

Trump once made "Drain the Swamp" one of his core campaign promises, meaning to eradicate political corruption and special interest groups in Washington. However, on the issue of cryptocurrency, he seems to be digging a new, more hidden, and potentially more dangerous "digital swamp".

This unicorn, which once embodied the ideals of liberalism, is now alienating into a swamp beast that resides in the center of power.

Unprecedented conflict of interest: The president and his family are directly profiting from an industry they are actively promoting deregulation for, and this blatant conflict of interest is extremely rare in the modern political history of the United States. This is no longer just about "opening a Trump hotel next to the White House," but rather a "supersized version of corruption" that privatizes public assets, evoking even a sense of governance dysfunction reminiscent of a "banana republic."

The institutionalization of the "bribery channel": Actions such as the $TRUMP dinner and equity negotiations with certain crypto tycoons with criminal records essentially put a price tag on political influence, providing interest groups with a channel to "buy off" the power core. This seriously undermines the integrity of politics and the fairness of decision-making.

The breeding ground for terror financing and cyber theft: due to its anonymity and the ease of cross-border movement, the cryptocurrency system has become an ideal tool for state-level hacking organizations (such as North Korea's "Lazarus Group") and terrorist organizations to carry out fund theft and terror financing.

Conclusion: Reflection on the era of "I, I, Meme"

"I, I, Meme (Me, me, meme)" — This pun imitating "Me, me, me" precisely captures the selfish nature of the current fusion of cryptocurrency and political power.

A technology that once claimed to empower the masses now seems more eager to serve a select few. Cryptocurrency has gained an unprecedented role at the policymaking table, but its reputation and fate are now closely tied to the rise and fall of its political patrons.

Trump's "preference" for cryptocurrencies may bring huge economic benefits to him and his family in the short term, and it can also gain a relaxed regulatory environment for the crypto industry. But as The Economist warns, the benefits of this transaction may ultimately flow in only one direction. When the political winds change, or when risks accumulate to a critical point and finally explode, the former "honeymoon" could instantly turn into a "nightmare."

The technology of cryptocurrency itself is not an original sin; it still demonstrates positive innovative potential in areas such as payments and asset tokenization. However, when this potential is hijacked by political speculation and bottomless pursuit of interests, and when "innovation" becomes a guise for "rent-seeking," the consequences it brings may be disastrous.

What people need is real financial innovation that can benefit the public and promote social progress, rather than a "swamp carnival" that ultimately burdens ordinary people.