The Treasury Department’s new leadership, led by billionaire hedge fund manager Scott Bessent, is poised to shape the future of U.S. crypto policy with a focus on taxation strategies.
President Donald Trump‘s pick for secretary of the Treasury, Scott Bessent, has been officially confirmed by the Senate, marking a significant development in the administration’s approach to digital assets policies. While crypto may not have been at the forefront of Bessent‘s nomination hearing, his background and training make him well-suited to tackle these complex issues.
Scott Bessent is a British hedge fund manager and former partner at Soros Fund Management.
He was part of the team that managed George Soros's $25 billion portfolio during the 1990s.
Bessent has also worked as a portfolio manager at Millennium Management and founded his own hedge fund, Parallax Capital Management.
He is known for his expertise in global macro investing and has been featured in various financial publications.
A History of Digital Assets Enthusiasm
Bessent, a billionaire former hedge fund manager, has long been an advocate for digital assets. His personal wealth was once invested in a bitcoin exchange-traded fund (ETF) , which he liquidated upon receiving Trump’s nomination. This familiarity with the industry and his enthusiasm for central bank digital currencies have earned him a reputation among crypto insiders as someone who understands their concerns.
The Treasury’s Role in Crypto Policy
As secretary of the Treasury, Bessent will be at the helm of the department tasked with developing U.S. crypto policy. He will work closely with other federal agencies and industry leaders to establish a framework for oversight and regulation. The Treasury has been assigned a spot on a governmental working group focused on digital assets, which will provide expertise from leaders in the field.
Crypto policy refers to the regulations and laws governing the use of cryptocurrencies.
Governments worldwide are developing policies to address concerns such as money laundering, tax evasion, and consumer protection.
The European Union's Fifth Anti-Money Laundering Directive (AMLD5) requires crypto exchanges to verify customer identities and report suspicious transactions.
In the United States, the Securities and Exchange Commission (SEC) classifies cryptocurrencies as securities or commodities.
As the crypto market continues to grow, policymakers face challenges in balancing innovation with regulatory oversight.
A Focus on Taxation
The Trump administration’s agenda is largely centered around extending tax cuts, which may temporarily shift the focus away from crypto policy. However, Bessent‘s department will still be responsible for erasing previous work on U.S. central bank digital currencies (CBDCs), a project that had stalled under former President Joe Biden.
A Ban on CBDCs
One of Trump’s executive orders has banned work on a U.S. CBDC, a move that has been welcomed by crypto insiders who have long feared the government might pursue a digital dollar. Bessent‘s opposition to a domestic CBDC was clear during his confirmation hearing, and he has stated that there is no reason to pursue such a project.
A Central Bank Digital Currency (CBDC) is a digital form of fiat currency issued by a central bank.
It exists only in electronic form and is not physical, unlike traditional currencies.
CBDCs are designed to provide a secure, efficient, and scalable way for people to make transactions.
They can be used for both retail and wholesale transactions, and their implementation is expected to increase financial inclusion and reduce the use of cash.
CBDCs are currently being explored by many countries around the world.
A Complex Legacy
Bessent‘s department will also be responsible for managing U.S. financial sanctions, which have been used to target overseas activity. The Treasury’s Financial Crimes Enforcement Network had previously focused on digital assets as a means of transaction in human trafficking and child exploitation cases. Bessent‘s department will need to navigate this complex landscape as it develops its approach to crypto policy.
A New Era for Crypto Regulation
With Bessent at the helm, the Treasury Department is poised to play a significant role in shaping U.S. crypto policy. As the administration continues to develop its approach to digital assets, one thing is clear: the future of cryptocurrency regulation will be shaped by this new era of leadership.
