‘Disaster’: Donald Trump move will ‘derail second term’

It’s been a big few days for the US President – but a big decision could open his administration up to “endless investigations”.

Donald Trump’s move to create a cryptocurrency federal reserve has been described as a “terrible idea” that could derail his presidency.

Investor Jason Calacanis, who co-hosts a podcast with Mr Trump’s crypto tsar David Sacks, has warned the use of taxpayer funds to “pump” digital tokens could lead to “disaster”.

“It’s a terrible idea to spend taxpayer money buying the crypto bags of the people who donated many millions to him,” he said.

The US President on Sunday named five cryptocurrencies under consideration for a new “strategic reserve,” sending their values skyrocketing and partly reversing a recent slump.

In a post to his Truth Social network, Mr Trump said a working group he set up shortly after taking office is moving forward with the reserve, which will include three smaller cryptocurrencies: XRP, Solana, and Cardano.

Donald Trump signed an executive order to create a crypto reserve. Picture: Anna Moneymaker/Getty Images

“A US Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration … I will make sure the US is the Crypto Capital of the World,” he wrote.

The value of all three digital currencies shot up on the news, with XRP trading up around 34 per cent overnight (AEDT). Solana gained around 22 per cent and Cardano rose more than 63 per cent.

A few minutes later, Mr Trump posted again, noting that other valuable cryptocurrencies including bitcoin and ethereum would be at “the heart of the Reserve”, causing the price of the two major digital currencies to rise more than 10 and 12 per cent respectively.

Jason Calacanis made a series of critical posts. Picture: X

Mr Calacanis took to X on Monday, AEDT, to state the crypto plan was a “giant distraction for Trump’s important mission” of fiscal responsibility, immigration and global affairs.

“That’s why he was elected — not to buy crypto bags from the donor class,” he said.

The angel investor said he believed the reserve would lead to “endless investigations” into how much crypto companies donated to Mr Trump and who personally owned the tokens.

“And for what purpose? How is it strategic at this moment in time to own crypto as opposed to say health care, closing the border or lowering the debt?

“Also, we can just TAX crypto and put that money in a USCR.

“Then you don’t have to TAX AMERICANS to buy the bags of the crypto people who donated a HUGE amount of money to Trump.

“This will be the issue that derails his second term.”

The $TRUMP meme coin launched this year. Picture: Jonathan Raa/NurPhoto via Getty Images

Mr Trump’s posts helped spur a broad rally among cryptocurrencies, which had plummeted in recent days as tariff threats and new scandals affecting the sector shook investor confidence in the highly volatile assets.

Sunday’s posts are not the first time that Mr Trump and those in his orbit have weighed in on the crypto sector.

Both he and wife Melania recently launched their own branded meme coins, sparking accusations that they were seeking to make money from his political success.

And the billionaire chief executive Elon Musk – a close political ally tasked with leading a government efficiency drive – has frequently promoted cryptocurrencies on his own social media network, X.

The Securities and Exchange Commission said last week that meme coins – such as the ones launched by the Trumps – were not subject to federal regulations.

It found they were more akin to “collectibles”, meaning the companies behind them were likely to be shielded from potential litigation.

The $TRUMP coin has lost 80 per cent of its value since launch on January 17, with buyers having lost a collective US$12 billion (AU$19.3 billion).

Democratic Congressman Sam Liccardo has said he planned to put forward the Modern Emoluments and Malfeasance Enforcement (Meme) Act.

He told ABC News: “The Trumps’ issuance of meme coins financially exploits the public for personal gain, and raises the spectre of insider trading and foreign influence over the Executive Branch.”