Thread by @SeanCasten

Scott Bessent is a smart guy. But he only got the job as Treasury Secretary because Trump knows how to identify people who will roll over for him. Which is to say, he knows better. So let’s fact check his oped in today’s WaPo, shall we? washingtonpost.com/opinions/2025/…

1. First, if you want to understand what the crypto legislation that passed the House will actually do to financial markets, here are the facts.

https://twitter.com/repcasten/status/1945522762384032092

2. Let’s define terms. “Blockchain technology” is just accounting. It’s a digital tag, tied to a digital purchase that records the buyer and seller. It is interesting, if not especially sexy. To the extent people can’t use it it’s because it doesn’t meet robust audit standards.

3. That is largely due to the crypto industry which has created an ecosystem where you can “hop” between different blockchains to hide the trail, can use anonymous wallets that hide buyers and sellers and go through digital mixers that scramble all legacy transaction records.

4. To say that the prior administration opposed those technologies is simply to say that the prior administration did not oppose GAAP accounting. The fact that the US TREASURY SECRETARY is shilling for shoddy accounting should scare the dickens out of us all.

5. So much here. First saying that we should be the crypto capital of the world is like saying we should be the meth capital of the world. What is the value proposition that crypto creates? It’s not money. It’s not innately valuable. Why do we want to be the leader in that?

6. I’m not saying there’s not a case to be made. I’m just saying that this is word salad masquerading as rhetoric. You’re not making an argument, you’re just aping industry talking points. #BeBetter.

7. But we should also talk about the guidance that was rescinded. If you are offering something for sale to the public with the expectation of a profit that you will manage, is the public entitled to information about your compensation, incentives, accounting records, etc?

8. It is a tenet of our securities law that if that is the case, you are subject to disclosure based regulation. By contrast, if you offer something that is purely a commodity (e.g., a barrel of oil) you are subject only to regulations that guard against market manipulation.

9. The Biden administration held that bitcoin was basically a commodity but much of the rest of crypto passed the prior test. This administration has said that no crypto is subject to investor disclosure and some (so-called, memecoins) aren’t subject to any regulation at all.

10. As you may be aware, Bessent’s boss was convicted of financial fraud and is making millions of dollars off a memecoin. We can’t say this loudly enough: THE US TREASURY SECRETARY IS COVERING UP FOR CRIMINALS IN THE WHITE HOUSE.

11. The prior administration also held - as a matter of standing law - that you cannot be the issuer of a security, the broker of that security and manage the exchange on which it trades. Massive conflicts of interest. You’d think the Treasury Secretary would understand that.

12. But Trump’s World Liberty Financial “defi” platform is doing that. And Bessent is too weak (or maybe complicit? Only disclosure would let us know for sure!) to stand up to Trump so he’s celebrating the defunding of the police rather than going after criminals.

13. This isn’t actually how the stablecoins work. It’s merely how their proponents claim they work. Specifically, they aren’t “dollar backed”.

14. They should be if you can always redeem them for $1. But the legislation - under pressure from industry, which includes the Trump family stablecoin - pushed to include legislation that (a) is not subject to audit (b) does not require $ to be held in insured accounts and…

15. …allows you to use weird other assets, possibly including other crypto as collateral. Industry wants this so they can earn interest on your deposits, but that means that a run on stablecoins is highly likely - as happened to USDC just 2 years ago. cnbc.com/2023/03/11/sta…

16. So these aren’t stable - they are just structured to spread contagion into the larger banking sector when the inevitable run on stablecoins comes. Again, you’d think this would be a problem for THE US TREASURY SECRETARY

17. Speaking of contagion. This is massively irresponsible as it can also infect US equities markets. “Tokenization” is crypto-speak for creating a digital certificate that confers no ownership in an equity but is priced at the same level… in theory.

18. A thing that is priced to a security but does not confer ownership is, ipso facto a derivative and subject to securities market regulation under Dodd Frank. The Clarity Act that Bessent is praising says that it would no longer be subject to that regulation.

19. Which in turn means that a company can raise money from investors through tokens that dodge regulation and disclosure. “Frictionless” is simply a synonym for “avoid regulatory compliance”. It ain’t a virtue.

20. Per WSJ these tokens are trading at wild volatility relative to the underlying equity - as you’d expect from things sold into thin markets with uninformed buyers. Great way to raise money, but an even better way to destroy trust in US equity markets. wsj.com/finance/stocks…

21. And that’s BEFORE stripping them away from current regulatory protection. The US Treasury Secretary is an arsonist, lighting trust in US markets on fire.

22. I’m now at the end of a train ride for a meeting in Chicago but far from complete. Maybe later. But Bessent is an embarrassment, and deserve shame, ridicule and history’s wrath for putting Trump’s personal wealth ahead of the US economy. /fin