The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Robert Cyran

NEW YORK, March 3 (Reuters Breakingviews) - Both the bull and bear cases for cryptocurrencies revolve around Donald Trump being a fan. The immediate upside was evident when prices soared over the weekend after the U.S. president again floated the idea of a strategic national reserve and name-checked some of the digital money he expects it might hold. There’s no reason for the government to own any such coins, however, and championing lesser-known ones is simply an invitation to corruption. Alongside the administration’s other recent policy decisions, it is undermining long-term legitimacy.

Trump used his Truth Social network to deliver the message touting solana, XRP and cardano for a possible U.S. crypto vault. These are minor coins with a combined value of less than $250 billion before the announcement, but the price of solana, for example, soared 50%. Only later did the president mention the more popular bitcoin and ether, which account for about 70% of the $3 trillion value of all cryptocurrencies, according to CoinMarketCap.

Stockpiles of commodities are helpful to cope with potential supply disruptions to fossil fuels or food or sustenance through a war. They also can minimize price swings, such as when President Joe Biden sold oil from the nation’s cache when it got expensive. Crypto, on the other hand, is largely used to speculate and evade capital controls, neither of which are essential functions of the U.S. economy.

What digital-currency proponents are mainly seeking is broader acceptance in the financial firmament, which would enable them either to be spent more easily or prove their use as a durable store of wealth. Some progress has been made, most notably when the U.S. Securities and Exchange Commission last year approved the listing and trading of options for spot bitcoin exchange traded funds offered by established money managers. BlackRock’s BLK.N now has nearly $60 billion of assets and the firm is adding a 1% to 2% allocation of its ETF to a model portfolio.

Although Trump is promoting bitcoin and its ilk, he is also undermining some of the progress they have made. His SEC cleared the way for grifters by issuing guidance that trendy, goofy meme coins are mere collectibles, like Pokemon cards, and therefore beyond the agency's remit. Meme coins associated with Trump and his wife, Melania, have both plummeted more than 80% in price since they were issued.

Possible conflicts of interest and lax enforcement don’t help either. Trump Media & Technology DJT.O is pivoting into digital currencies, and the president owns a big stake in crypto project World Liberty Financial. Meanwhile, the administration dropped a lawsuit against exchange Coinbase COIN.O, paused litigation targeting rival Binance and is seeking to resolve its case against Chinese entrepreneur Justin Sun. The White House attention may help short-term prices, but it ultimately reinforces all the reasons to discount crypto.

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CONTEXT NEWS

The price of bitcoin jumped as much as 11% to nearly $95,000 after U.S. President Donald Trump on March 2 raised the possibility of a new strategic cryptocurrency reserve for the country, which he initially said would include XRP, solana and cardano. He followed up on his Truth Social service by indicating that the reserve also would hold bitcoin, ether and others.

(Editing by Jeffrey Goldfarb and Pranav Kiran)

((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com))