Trump’s Bitcoin Reserve Plan Draws Criticism
US President Donald Trump’s decision to establish official government cryptocurrency reserves has drawn criticism from industry watchers. The executive order creates a Strategic Bitcoin Reserve and a Digital Asset Stockpile for other digital currencies. The funds will be stocked with coins forfeited to the federal government through criminal or civil proceedings.
White House AI and crypto tsar David Sacks likened the reserve to a “digital Fort Knox for cryptocurrency,” drawing comparison to the Kentucky military base that stores a significant portion of US gold assets. However, some crypto enthusiasts have criticized the government for not being bolder, while others have raised concerns about the lack of transparency in the process.
Sacks ordered a full accounting of the federal government’s existing crypto reserves, estimated at 200,000 Bitcoin worth $17.5 billion at current prices. Charles Edwards of Capriole Fund called the announcement “a pig in lipstick,” stating that without active buying, it’s “just a fancy title for Bitcoin holdings that already existed with the government.”
The executive order mandates that the Treasury and Commerce secretary develop strategies for acquiring more government Bitcoin, provided they are “budget neutral and do not impose incremental costs on United States taxpayers.” Jason Yanowitz of Blockworks agrees with the concept of a Bitcoin reserve but criticizes the inclusion of other coins, saying it sets a “horrible precedent” and “makes no sense.”
Other analysts have been more positive. Russ Mould of AJ Bell said, “This approach makes much more sense than buying the assets.” It remains unclear how the crypto reserve would benefit Americans, but Sacks assured it “will not cost taxpayers a dime.” The US will not sell any Bitcoin deposited in the reserve and will keep it as an asset.
The announcement led to a more than 5% drop in Bitcoin prices, as Sacks implied that the US government would not be buying Bitcoin. Some countries maintain strategic reserves of national assets to diversify government holdings and hedge against financial risk. The US also keeps a petroleum reserve, and Canada has a maple syrup reserve.
Trump revealed five cryptocurrencies he would like included in the strategic reserve, causing their market prices to jump. Yanowitz warned that the US government needs to avoid being seen as picking winners and emphasized the importance of transparency through independent audits and public reporting.
Each government department, including intelligence agencies, will have to audit and self-report their cryptocurrency holdings. The Secretary of the Treasury will set up accounts for Bitcoin and other digital assets. Trump’s move aggressively courts the crypto community, contrasting with former President Joe Biden’s crackdown on crypto citing fraud concerns.
