Congratulations, American taxpayer: You are going all in on crypto.

This weekend, President Donald Trump announced that he is moving forward with a plan to create a strategic cryptocurrency reserve, purchasing bitcoin and ether, as well as the more esoteric instruments XRP, solana, and cardano. The reserve will “elevate this critical industry after years of corrupt attacks,” Trump wrote on his social-media site, Truth Social. “I will make sure the U.S. is the Crypto Capital of the World.”

For the taxpayer, the purpose of such an initiative is obscure. The crypto industry is a hyper-speculative casino. It is not essential to the American financial system, nor are cryptocurrencies essential to the American public. Workers cannot put bitcoin in their gas tanks; parents cannot feed XRP to their kids; businesses do not need cardano to build roads, light cities, produce vaccines, or provide loans to homeowners and entrepreneurs.

Yet for the White House, the purpose is obvious. Trump’s commerce secretary, his AI and crypto czar, and several of his most influential policy advisers are crypto investors, and the president launched his own memecoin. Establishing a reserve would boost prices, enriching these public officials and the crypto magnates donating tens of millions of dollars to Republican campaigns. It would not be a public investment, but a private giveaway—one of a mounting number in the Trump era.

The White House has put out few details on how a federal crypto reserve would work. But a stalled Senate bill would order the government to purchase 100 million bitcoins, hold the assets for two decades or longer, and sell them to retire the national debt. The government could transfer the $19 billion in crypto it has seized from criminals to the stockpile; the Treasury could finance additional purchases by revaluing the gold reserve, Senator Cynthia Lummis of Wyoming has proposed, so that “not a single U.S. taxpayer dollar” would be spent. Trump’s crypto czar has also indicated that the reserve would not involve new taxes or spending.

Yet the reserve would use taxpayer resources, diverting them from other purposes. If crypto prices soar, the Treasury could retire a chunk of the debt. If crypto prices crater, the public would end up worse off. “I don’t think turning the government into a hedge fund is a viable solution” to the country’s fiscal challenges, Mark Zandi, of Moody’s Analytics, told me. He suggested addressing them the old-fashioned way, by cutting spending, raising taxes, and promoting growth.

Government experts see no strategic justification for the proposed reserve. The United States maintains stockpiles of crucial materials: vaccines and other pharmaceuticals, rare-earth minerals used in weapons manufacturing, crude oil. “There are important differences between reserves for real commodities, like petroleum, where a shortage may result in serious harm to the American people,” and the kind of speculative fund Trump is promoting, Bharat Ramamurti, an economic adviser to the Biden administration, told me. “Cryptocurrency does not meet any of those standard conditions.”

For the many, the reserve poses an unnecessary risk; for the few, it offers rich rewards. The mere prospect of the government speculating in the crypto market is already enriching the small share of Americans heavily invested in the assets. The price of bitcoin, ether, solana, XRP, and cardano jumped more than 10 percent when Trump published his Truth Social post. More broadly, the proposed reserve would mainstream a fringe industry and create public interest in high crypto prices—justifying later interventions in the market and nudging foreign governments and institutional investors to get in too.

The crypto fund is only the latest example of ascendant crony capitalism in Trump’s Washington. The president is strip-mining taxpayer resources and doling out contracts and favors to the politically connected. The risk is not just corruption, but higher interest rates and less competitive markets.

The tariffs that Trump has implemented on imports from China, Mexico, and Canada create a massive opportunity for favor-trading. In Trump’s first term, the White House imposed levies on $550 billion worth of Chinese goods, allowing American firms to apply for a tariff exemption if they could not find substitutes for imports or if the tariff would “impose significant harm on American interests.” An analysis found that the Office of the U.S. Trade Representative disproportionately awarded exemptions to firms that made contributions to Republican candidates and disproportionately denied exemptions to firms supporting Democrats. The policy amounted to a “quid pro quo,” the economists concluded.

The Trump administration has pushed more blatant quid pro quos this time around. The advertising conglomerate Interpublic Group is attempting to merge with its rival Omnicom. Lawyers from Elon Musk’s X suggested that  Interpublic executives should boost advertising spending on the social-media platform “or else,” The Wall Street Journal reported. Or else, the Interpublic employees gathered, they run the risk of federal regulators scuttling or delaying the merger. Musk has also agitated for the Federal Aviation Administration to award a contract for air-traffic-control communications systems to SpaceX, his space-technology company. As a special government employee, Musk is supposed to be banned from influencing contracts in which he has a financial interest.

Threatening companies that decline to call the Gulf of Mexico the “Gulf of America.” Investigating firms that choose to maintain DEI policies. Proposing to privatize the United States Postal Service. Each is an example of the Trump administration trying to aid his supporters or damage his opponents, without regard for the public’s welfare. Each is an example of crony capitalism.

The strategic crypto reserve is a foolish idea, and the broader trend a dangerous one. Fifty years of studies on Russia, Hungary, Indonesia, India, the Philippines, and elsewhere have found that governments creating policies for and awarding contracts to politically aligned firms warps investment and damages markets. Connected firms flourish. Disfavored firms struggle. Corruption takes root. Taxpayers end up with degraded public services, and lose confidence in their elected representatives. In extreme cases, the practice heightens interest rates, slows down GDP growth, and makes countries vulnerable to financial collapse.

Trump fashions himself a swamp-draining, free-market-loving conservative, but there’s nothing conservative about this kind of intervention in the economy. “I’m against it! I’m against it all,” Veronique de Rugy, an economist at the right-of-center Mercatus Center, at George Mason University, told me. Trump “just announced: Farmers, prepare yourselves to sell all your products here; we’re going to tax exports. What is he talking about, really? Five percent of the consumers in the world are here. There’s only so much corn I can eat.” She told me she held out some hope for Trump’s deregulatory push and his plans to cut the budget. But she worried about the government being in hock to steel CEOs, crypto bros, Big Agriculture executives, military contractors, and anyone else who happens to have deep pockets and Trump’s ear, particularly given the president’s willingness to push his executive authority beyond the limits of American law.

“For us libertarians,” de Rugy said, “it feels like we’re being punched in the face with our own fist.”