What To Know About Trump’s Pick for U.S. Treasury Secretary

Scott Bessent’s background, priorities, and potential impact on the crypto industry

RELATED POSTS

Trump’s pick for Treasury secretary, Scott Bessent, is expected to be one of the most pro-crypto officials in his administration. Given his experience in foreign exchange markets, Bessent is among Trump’s least controversial nominees. Polymarket, a crypto prediction market, gives him a 95% chance of being confirmed.

Bessent is a former hedge fund manager with experience in foreign currency markets. While he worked at George Soros’ hedge fund, he bet against the British pound and the Japanese yen. His bets against those currencies were controversial and profitable. 

Further, he’s a crypto enthusiast, which bodes well for platforms like Polymarket.

What to do with cryptocurrencies

The Treasury Secretary advises the president on tax, trade, and fiscal policy. If confirmed, Bessent would be positioned to advise Trump about what the U.S. government should do with cryptocurrencies. 

The idea of a national Bitcoin reserve has received a lot of media attention. However, more practical reforms could solve immediate industry problems. 

Clear regulatory authority: Ripple Labs spent years in an SEC lawsuit about whether its XRP token was a security or commodity. (The court ruled it was a digital commodity.) That case decided whether the SEC had regulatory authority over the XRP token, but it took an expensive lawsuit to settle that question. A clear regulatory framework would eliminate the need for lawsuits to settle basic regulatory questions. The lower regulatory risk could encourage investment in similar startups.

More distributed ledgers: The distributed ledgers that cryptocurrencies run on could allow traders to own pieces of an asset. It’s why so many people can own a fraction of a bitcoin instead of paying $100,000 for a whole bitcoin. Allowing the distributed ledger technology to expand could make more securities and commodities accessible to more small investors.  

Tax reporting: Many companies, like RobinHood, automatically report customer earnings over $600 to the IRS for tax purposes. However, many crypto transactions go unreported. CoinBase may keep track of crypto transactions, but a crypto transaction sent over an airdrop doesn’t automatically go to the IRS. A crypto tax code could address this issue, as well as tax rates for short and long-term holdings.    

Capital requirements: Other countries that have regulated institutional crypto investment firms have set capital requirements to avoid a financial meltdown. Institutions need enough cash and crypto on hand to redeem customer deposits and handle panics from sudden and large drops in currency values. Republicans tend to favor lower capital requirements to encourage higher trading activity. However, allowing capital requirements to get too low can make a 2008-style financial meltdown possible. It’s a balancing act that will likely tilt in favor of the crypto industry in  

Prediction market contracts and other derivatives

While Bessent has focused on crypto broadly, prediction markets and other derivatives are expected to benefit from a looser regulatory regime in Trump’s second term. Greater participation in crypto markets could lead to greater participation in other commodities, too. 

A hands-off approach among new regulators could also reduce legal burdens on the prediction market industry. Kalshi sued its regulator, the CFTC, in September 2023 over the right to offer election contracts. A CFTC chair who either settles with Kalshi before an opinion is released or who creates rules allowing election contracts could reduce the legal uncertainty surrounding one of Kalshi’s most popular market categories. 

Trump and his circle are also enthusiastic about prediction markets. Elon Musk gave Polymarket a shoutout just under a month before the 2024 election when he called betting markets “more accurate than polls.” Trump’s campaign team reportedly viewed Kalshi’s odds throughout election night, and the company’s executive team met with Trump at UFC 309.  

In fact, the prediction market industry will have one of its own on Bessent’s staff. Kalshi’s former Head of Business Development, Samantha Schwab, has been tapped for Bessent’s Deputy Chief of Staff.

Even though prediction markets aren’t explicit priorities for Bessent, prediction markets are expected to benefit from the decisions he will likely make in related industries. 

Buy JNews
ADVERTISEMENT

Join the

Prediction News Community

Featuring prediction market
analysis, data insights
plus
comprehensive industry reporting

Prediction Platforms

Who will win the 2024
US Presidential Election?

Loading..

Loading..

Loading..

Loading..

Loading..