Friends-of-the-BLPB Will Thomas and Jeff Zhang have posted a draft essay to SSRN that I have put on my reading list for this week. Entitled Crypto Kleptocracy, the piece outlines the public corruption capacity of cryptocurrencies, concluding that they enable “corruption to reproduce itself, translating political power into personal wealth without the familiar, formalistic markers of explicit exchange or quid pro quo.” The SSRN abstract follows.

Many Americans are worrying about whether they will soon be living in a post-democracy autocracy. But in the meantime, they may already be living in a crypto-fueled kleptocracy. Less than one year into his second presidential term, Donald Trump has reportedly taken his wealth to new heights by embracing, both as a businessman and a politician, the crypto industry. Trump’s family businesses are involved in minting Trump-themed meme coins, creating America-themed stablecoins, and mining for crypto assets—so successfully that most of Trump’s wealth is likely now from crypto, not real estate. All the while, the Trump Administration is rolling back crypto regulations, abandoning ongoing crypto prosecutions, and pardoning crypto criminals.

But this Essay is not about Trump. Crypto creates new channels for public corruption that operate on autopilot, generating wealth without transactions, contracts, or promises for the law to easily pin down, prevent, or punish. Future politicians looking to convert public trust into private fortune need only follow this new playbook: adoption is cheap, monitoring is hard, and payouts can be tremendous. President Trump’s second term makes vivid the potential for abuse, but the dangers won’t end there. If the United States fails to adapt, we risk entrenching a twenty-first century kleptocracy where the boundary between political power and personal enrichment is no longer blurred—it is erased.

I appreciate Will and Jeff sharing the link to this draft with me and look forward to giving it a good read. I expect that some of the observations they make may dovetail with my current work on blockchain business and fraud.