In the recently released national security strategy by the Trump administration, there was a notable absence of any mention of cryptocurrency or blockchain. This is surprising given the increasing integration of these technologies into the financial system and President Donald Trump's previous statements regarding global competition in this area. Instead, the strategy document emphasizes "core, vital national interests" focused on artificial intelligence and quantum computing, detailing the administration's ambition for U.S. technology and standards in AI, biotech, and quantum computing to lead globally. Despite Trump's previous remarks on CBS’ 60 Minutes about not wanting China to dominate the crypto space, and his expressed desire for all Bitcoin (BTC) mining to occur domestically, these sectors were not addressed in the strategy.
Earlier this year, CIA Deputy Director Michael Ellis highlighted the importance of maintaining a competitive edge against China in the realm of cryptocurrency. The document does make a broad statement about the importance of preserving and enhancing America’s financial sector dominance, hinting at digital finance and innovation to maintain market liquidity and security, which can be interpreted as an indirect nod to cryptocurrency.
Despite this omission, the Trump administration has been active in advancing policies related to cryptocurrency throughout the year. Initiatives include supporting the stablecoin-regulating GENIUS Act, issuing executive orders to establish a crypto task force, banning central bank digital currencies, and reducing enforcement actions against crypto-related activities. Additionally, the administration has created a Bitcoin reserve and a stockpile of crypto assets, which includes assets forfeited to the government, while exploring methods to acquire more without affecting the budget.
The recent document release, which also called for increased defense spending from NATO allies, has caused market reactions. These demands for higher defense budgets are expected to elevate government borrowing, potentially leading to increased inflation and complicating interest rate cuts by central banks. The cryptocurrency market is closely watching the Federal Reserve's upcoming interest rate decision, with many investors anticipating a rate cut. This expectation has been reflected in market movements, as CME’s FedWatch indicates an 88.5% probability of a 25 basis point reduction when the Fed convenes.