President Donald Trump has taken a significant step toward his vision of making the United States the crypto capital of the planet by signing an executive order establishing two national cryptocurrency reserves potentially worth billions of dollars. The move represents a major shift in U.S. government policy toward digital assets and could have far-reaching implications for the cryptocurrency market globally.
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| This image symbolizes the secure holding of Bitcoin within the newly established national cryptocurrency reserves by President Trump |
The Two-Pronged Approach to Government Crypto Holdings
The executive order signed by President Trump on Thursday creates two distinct cryptocurrency repositories: a strategic Bitcoin reserve dedicated exclusively to Bitcoin, and a separate national digital asset stockpile for other cryptocurrencies. Both reserves will be populated with digital assets that have been seized by U.S. government agencies through criminal and civil asset forfeiture proceedings over the years. According to White House crypto czar David Sacks, the U.S. has obtained approximately 400,000 Bitcoin over the past decade through such legal actions, and the government believes it still possesses roughly half that amount.
Current Holdings and Valuation
Based on blockchain analytics from researcher Arkham, the U.S. government currently holds approximately USD $17.5 billion worth of Bitcoin and about USD $400 million in various other cryptocurrencies in its known digital wallets. However, Sacks acknowledged in a Bloomberg TV interview on Friday that the exact figures remain uncertain: We say we believe because no one knows for sure, we never had a proper audit. This lack of clarity has prompted the executive order to mandate a comprehensive audit of all government cryptocurrency holdings as one of its first actions.
No Taxpayer Funding for Acquisitions
A key aspect of the executive order is that it stipulates the reserves will not use taxpayer money for additional cryptocurrency purchases. The Bitcoin reserve and digital asset stockpile will initially consist solely of crypto assets already in government possession through forfeitures. While the order does authorize the Treasury and Commerce departments to develop budget-neutral strategies for potentially acquiring more Bitcoin for the reserve, it explicitly states these must come at no incremental costs to taxpayers. The separate stockpile of other digital assets will not be expanded beyond what is obtained through future forfeiture proceedings.
Different Management Philosophies
The two repositories will operate under distinct management philosophies. According to Sacks, With the reserve, the goal is long-term preservation. With the stockpile, the goal is responsible stewardship. This suggests the government intends to hold Bitcoin as a long-term store of value—what Sacks described as a digital Fort Knox for the cryptocurrency often called 'digital gold'—while potentially taking a more active management approach with other digital assets.
Market Reaction and Challenges
The cryptocurrency market responded cautiously to the announcement, with Bitcoin falling approximately 3-6% following the news. The plan faces several challenges, including questions about the legal status of some seized assets. Notably, around 95,000 Bitcoin in the government's possession were seized as part of an investigation into the 2016 hack of crypto exchange Bitfinex. In January, U.S. prosecutors petitioned a federal judge to approve returning these stolen Bitcoin to Bitfinex, raising questions about whether these assets are included in the government's holdings estimate.
Political and Economic Implications
The establishment of these national crypto stockpiles could inspire similar actions by U.S. states and other national governments. Already, legislators in Texas, Ohio, New Hampshire, and countries including Brazil, the Czech Republic, and Hong Kong have introduced bills that would authorize their treasuries to purchase Bitcoin. However, economists have questioned the economic rationale behind the reserves, noting that unlike traditional reserve assets that generate income, Bitcoin produces no yield, making it potentially costly to hold.
The Road Ahead
For the reserves to have lasting impact beyond Trump's presidency, they will likely need to be enshrined in legislation. As Patrick Hillmann, former chief strategy officer at crypto exchange Binance, noted, [Crypto businesses] need to know that in four years when a new president is elected, they don't undo all of the EOs that President Trump has signed. The initiative represents just one component of Trump's broader crypto-friendly agenda, which has already seen the appointment of industry-friendly regulators and the pausing or closing of multiple SEC investigations into cryptocurrency firms.