One dream pick for a crypto-friendly treasury secretary in Donald Trump’s second administration will not be happening, as prominent hedge fund manager John Paulson said today that he won’t be taking the job.
Speaking about his decision, Paulson said, “My complex financial obligations would prevent me from holding an official position.”
That admission is certainly true. For example, Paulson’s massive equity positions in government-sponsored enterprises Fannie Mae and Freddie Mac, whose profits are swept into the US Treasury, have more than doubled in price since Trump won re-election. His conflict of interest is certainly evident.
With Paulson dropping out of the race, other contenders for the position include Key Square Group’s Scott Bessent, Cantor Fitzgerald’s pro-Tether Howard Lutnick, Jay Clayton, and Jamie Dimon.
Crypto advocates had pinned hope on Paulson
Some crypto proponents had initially viewed Paulson as an incoming ally in the world’s most powerful sovereign treasury. Despite his previous skepticism towards digital assets, optimism stemmed from Paulson’s reputation as a savvy investor who has proven allegiance to Trump for years.
Just as Trump pivoted from anti- to pro-crypto during his career, so too might have Paulson. Indeed, after a half dozen NFT collections, a DeFi project, and various pro-bitcoin promises, Trump has certainly re-branded himself as a pro-crypto leader.
Many in crypto believed that Paulson’s understanding of financial markets and his willingness to embrace unconventional economic policies could translate into a favorable regulatory environment for the class. His leadership at the 100,000+ employee treasury would have been a welcome reprieve from Janet Yellen’s anti-crypto reign.
They hoped his appointment might lead to policies that would encourage innovation in digital assets and support the growth of bitcoin and other cryptocurrencies.
Although offshore binary options markets like Polymarket do not indicate actual odds of success, Scott Bessent is currently the frontrunner for Trump’s Secretary among prediction market gamblers.
Although Paulson will not be the country’s next Treasury Secretary, other pro-crypto contenders like Bessent and Lutnick are next in line.
As the Biden-to-Trump transition process continues, the industry will be watching closely to see how treasury leadership affects digital assets during the second Trump administration.
