President Donald Trump, during a Bitcoin conference held in Nashville as part of his 2024 campaign, recently announced an executive order that is making waves in the cryptocurrency world.
On Thursday, Trump signed an executive order to create a “Strategic Bitcoin Reserve” and a stockpile of U.S. digital assets. This move followed an initial proposal that included cryptocurrencies beyond Bitcoin, which led to some pushback from tech leaders. The administration later clarified that it was establishing separate reserve and stockpile components.
Trump, who aims to be America’s “first crypto president,” has been aligning himself with an industry that largely supported his previous presidential campaign. A January executive order demonstrated support for digital financial technology. Furthermore, the U.S. Securities and Exchange Commission (SEC) has dropped lawsuits against major cryptocurrency exchanges, including Coinbase and Kraken, while also postponing a civil fraud case against crypto entrepreneur Justin Sun, who had lauded Trump and invested in his digital ventures.
The White House is scheduled to host its first-ever crypto summit on Friday.
What is a Crypto Reserve?
The Trump administration has defined the crypto reserve as a national stockpile of digital assets. It would potentially include cryptocurrencies the government lawfully seizes from criminals, based on a January executive order. Trump initially mentioned the idea of a bitcoin reserve during his campaign.
On March 2, Trump stated on Truth Social that the reserve would encompass cryptocurrencies such as Bitcoin, XRP, Solana, Cardano, and Ether. The U.S. government currently holds an estimated $17 billion worth of Bitcoin, in addition to other seized cryptocurrencies, according to data from Arkham Intelligence.
Following this announcement, the Trump administration clarified on Thursday that the President is establishing a strategic bitcoin reserve and a separate stockpile of U.S. digital assets.
The U.S. has a history of creating reserves for essential resources like petroleum, helium, and medical supplies, allowing the government to utilize such resources during emergencies like national disasters or wars. The U.S. Treasury also safeguards gold as an asset considered a hedge against inflation.
“This is an odd thing for Republicans to be proposing, because it’s got the government intervening in the economy to provide [a] service to the public that the public can provide for themselves,” stated Larry Harris, a professor of finance and business economics at the USC Marshall School of Business.
Why Does Trump Want a Crypto Reserve?
In his Truth Social post, Trump explained that the reserve would “elevate” the cryptocurrency industry “after years of corrupt attacks by the Biden Administration,” further aiming to position the U.S. as the “crypto capital of the world.” As the cryptocurrency industry provided hundreds of millions of dollars to support Trump and other congressional candidates, some critics are concerned that he may be trying to reward his campaign supporters or potentially himself. Trump and his wife, Melania, have launched separate meme coins, and his family has connections to a crypto venture called World Liberty Financial, which raises concerns about possible conflicts of interest.
White House AI and crypto czar David Sacks, co-founder of Craft Ventures, who has worked at companies like PayPal, was previously accused of conflicts of interest.
Wyoming Republican Sen. Cynthia Lummis introduced a federal bill to create a bitcoin reserve, highlighting that holding digital assets could serve as a “hedge against economic uncertainty and monetary instability.” Such a reserve would require congressional backing.
However, financial experts have raised concerns about the volatility of digital assets like Bitcoin.
“There’s no question that there will be crashes. So how can it possibly make any sense for the government to associate itself with something that’s going to die, that’s going to crash, even if it comes back again afterwards?” Harris said.
Initial Reactions from Tech Leaders and Crypto Enthusiasts
Early this week, tech, and cryptocurrency leaders—including Trump supporters—showed skepticism towards the creation of a reserve that included tokens beyond bitcoin. The announcement of specific tokens led to initial price spikes in bitcoin, XRP, solana, and other cryptocurrencies, which were followed by subsequent drops.
“It is picking a winner technology-wise. And the problem is we’re not really even in the first inning of that battle,” said Gene Hoffman, CEO of Chia Network, a blockchain technology company. Some Bitcoin supporters prefer the government to treat the cryptocurrency similarly to gold; however, Hoffman described another group of people who “frankly bought access to the White House.”
Ripple, which has connections to XRP, directed attention to comments by its CEO, Brad Garlinghouse, who expressed his pleasure that President Trump recognizes the multi-chain world in which we live.
Redwan Meslem, the Executive Director of the Enterprise Ethereum Alliance, highlighted the importance of the crypto industry’s diverse technological visions, stating that the group was quite pleased with Trump’s inclusion of Ether.
Tyler Winklevoss, co-founder of cryptocurrency exchange Gemini, posted on X that he believes only Bitcoin is suitable for the reserve.
Brian Armstrong, CEO of Coinbase, expressed on X that a Bitcoin reserve is the “best option,” but also suggested “a market cap weighted index of crypto assets” for individuals looking for more variety in the reserve.
Joe Lonsdale, a venture capitalist and Trump supporter, voiced his opposition via X, stating:
“It’s wrong to steal my money for grift on the left; it’s also wrong to tax me for crypto bro schemes.”
The Trump administration addressed some of the concerns in its executive order.
Funding the Reserve and Digital Asset Stockpile
Sacks emphasized in a Thursday post on X that the reserve’s implementation “will not cost taxpayers a dime” because the bitcoin will include cryptocurrencies already owned by the federal government through criminal or civil asset proceedings. He clarified:
“The U.S. will not sell any bitcoin deposited into the Reserve. It will be kept as a store of value.”
The separate U.S. digital asset stockpile will include cryptocurrencies other than bitcoin that have also been forfeited in criminal or civil proceedings.
“The government will not acquire additional assets for the Stockpile beyond those obtained through forfeiture proceedings. The purpose of the Stockpile is responsible stewardship of the government’s digital assets under the Treasury Department,” he stated. The White House has yet to reply to a request for comment.
What Happens Next?
The White House is hosting its crypto summit on Friday, with executives from Ripple, Gemini, Robinhood, Kraken, Coinbase, and World Liberty Financial expected to attend, amongst others. Additional details about the reserve plan are set to be disclosed during the summit.
