Days after announcing the Crypto Strategic Reserve, President Donald Trump signed an additional executive order establishing a Strategic Bitcoin Reserve and a Digital Asset Stockpile. While both initiatives are still in development, the plan calls for the Secretary of Treasury to create an office that maintains control of bitcoin and digital assets confiscated through criminal or civil forfeiture. The order also directs the Treasury and the Secretary of Commerce to develop strategies for acquiring additional bitcoin, provided those strategies are “budget neutral” and “do not impose incremental costs on United States taxpayers.” Going forward, the government would only be allowed to acquire digital assets other than bitcoin of they were gathered “in connection with criminal or civil asset forfeiture proceedings” or as payment for civil penalties imposed by an agency — unless otherwise stated by further executive or legislative action.
President Donald Trump’s promise to create a cryptocurrency reserve fund has created quite a stir in the crypto industry. The program, which is still being designed, would call for the federal government to buy and hold multiple crypto assets alongside other reserve assets like gold and foreign currencies.
What Is the Crypto Strategic Reserve?
The crypto strategic reserve is a plan proposed under President Donald Trump for the U.S. government to buy, hold and eventually sell cryptocurrency as a hedge against inflation and economic instability. Supporters say profits from crypto could boost the dollar’s value over time, but critics argue these assets are too risky for the country’s central bank to invest in.
Proponents assert that such a reserve would offer a hedge against inflation and monetary instability. By diversifying the government’s financial portfolio with cryptocurrency, they argue, these assets could bolster the value of the dollar. Crypto assets are notoriously volatile, however, and if their value plummets, they could become a financial liability, saddling the government with billions of dollars in additional debt.
Still, the creation of a dedicated crypto reserve is an important step in Trump’s broader strategy to position the United States as the so-called “Crypto Capital of the World.”
What Is Trump’s Crypto Reserve?
Trump’s proposed crypto strategic reserve would be a government-managed fund designed to strengthen the U.S. economy and elevate a “critical industry” after years of what he described as “corrupt attacks” by former President Joe Biden’s administration, according to a March 2 post on Truth Social.
The president initially floated the idea of creating a bitcoin strategic reserve at the 2024 Bitcoin Conference, where he also promised to deregulate the crypto industry and fire former U.S. Securities and Exchange Commission Chairman Gary Gensler — a stance that helped him secure millions of dollars in campaign contributions from the crypto community. At that same event, U.S. Senator Cynthia Lummis, a Republican from Wyoming, announced she had drafted legislation to create a national bitcoin reserve. The bill was referred to the Committee on Banking, Housing and Urban Affairs, but no further action has been taken.
Then, amid a flurry of other executive orders signed during his first week in office, Trump established the President’s Working Group on Digital Asset Markets. The group is responsible for developing crypto regulations and evaluating the creation of a “national digital asset stockpile” potentially made up of cryptocurrencies seized by law enforcement agencies. The U.S. government currently owns nearly $17 billion in crypto assets, according to Arkham Intelligence, the vast majority of which is bitcoin.
The working group isn’t required to submit its findings to Trump until July, but Trump announced on March 2 that the crypto reserve is moving forward and will include five cryptocurrencies: bitcoin, Ether, XRP, Solana and ADA.
What Coins Will Be Included in the Reserve?
After months of speculation about which coins would be included, Trump announced on March 2 that the reserve will include bitcoin, Ether, XRP, Solana and ADA (Cardano). The government does not own several of these crypto assets, so it would presumably need to purchase them to fulfill the working group’s vision.
Trump’s initial social media post mentioned only XRP, Solana and ADA, but Trump clarified later that morning that bitcoin and Ether are also considered “valuable cryptocurrencies” that will be at “the heart of the Reserve.”
The Sunday morning announcement temporarily inflated crypto prices, which had been lagging after Trump’s election boosted them to their highest levels since the crypto boom of 2021. Bitcoin, which had surpassed $100,000 just weeks earlier, jumped from about $85,000 to nearly $95,000 the day of the announcement before landing back at $85,000 the following day.
Some of the lesser-known stocks saw a larger price spike under Trump’s spotlight. Cardano, which was the ninth largest cryptocurrency by market capitalization, jumped nearly 80 percent on the day of the announcement but lost more than half of its gains the following day. As of March 4, Cardano has overtaken Dogecoin and is now the eighth largest cryptocurrency by market capitalization, according to CoinGecko.
How Will the Reserve Work?
It’s not exactly clear how Trump’s crypto reserve will operate, as it’s still being formulated by the administration’s working group on digital assets. Once a plan is developed, any new expenditures would need to be approved by Congress.
David Sacks, the “White House AI and crypto czar,” has said more details will be announced during the first-ever White House Crypto Summit on March 7.
While much is unknown about Trump’s crypto reserve, Lummis’ proposed BITCOIN Act offers a preliminary sketch of what such a program might look like. The bill calls for the U.S. Treasury Department to purchase up to 200,000 bitcoin per year over a five-year period. These assets — totaling up to 1 million bitcoin, or $85 billion — would be held for at least 20 years under the proposed bill.
The government, which already holds 200,000 bitcoin ($17 billion) from law enforcement seizures, would purchase the additional 800,000 bitcoin ($68 billion) through three actions:
- Reducing the Federal Reserve surplus by $4.42 billion
- Reallocating the first $6 billion in annual Federal Reserve remittances to the Treasury Department (assuming there are any)
- Requiring all Federal Reserve banks to trade in their gold certificates from the 1970s for new gold certificates with an updated fair market value. The banks would then remit those profits to the Treasury Department.
The BITCOIN Act would also allow states to participate in the strategic reserve through segregated funds. More than 20 states are considering some form of crypto investments, including strategic reserves, according to a CoinDesk report.
Reactions to Trump’s Crypto Reserve Plans
From traditional economists to the crypto fanatics, Trump’s plans to create a digital asset reserve has sparked strong reactions from all sides — most of them negative.
Economists’ Rejection
Economists have soundly rejected the economic merits of creating a national crypto reserve. In a December survey of 40 top economists, only one agreed that a strategic crypto reserve would benefit the U.S. economy. That lone economist — John Cochrane, a senior fellow at the Hoover Institution and the Stanford Institute for Economic Policy Research — appeared to check the wrong survey response.
“Borrowing more to ‘invest’ in bitcoin is about the worst idea I’ve heard,” Cochrane wrote.
Steven Rattner, CEO of Willett Advisors investment firm and economic analyst on MSNBC’s Morning Joe, said a crypto reserve is an “outright waste of taxpayer dollars aimed at enriching the crypto industry.”
Bitcoiners’ Disappointment Over Additional Coins
Trump’s announcement peeved Bitcoin enthusiasts, too, who had been eagerly awaiting the “strategic bitcoin reserve” he announced at the Bitcoin 2024 Conference last summer. But his rebranding of the project to a “national digital asset stockpile” in January, and now a “crypto reserve” with five cryptocurrencies, was not what the Bitcoin community had in mind.
Brian Armstrong, co-founder and CEO at crypto exchange Coinbase, said the crypto reserve fund would be better off sticking to bitcoin, as it’s the “simplest” and offers the clearest similarities to gold. Bitcoin’s currency circulation is limited to 21 million coins, and proponents say that scarcity gives it value.
Anthony Pompliano, founder and CEO of Professional Capital Management, disagreed with Trump’s decision to include crypto assets other than Bitcoin as well, even though he also invests in Solana. He likened the altcoins in Trump’s crypto reserve to “a random smattering of speculative tools that will enrich the insiders and creators of these coins at the expense of the U.S. taxpayer.”
Perianne Boring, founder and CEO at blockchain trade association The Digital Chamber, told Built In that Bitcoin’s unique characteristics — namely, its scarcity and decentralized nature — make it a stronger candidate for a national reserve asset compared to other cryptocurrencies.
In addition to creating a bitcoin reserve, Boring suggested the government create a national crypto fund to purchase non-Bitcoin crypto assets and back further blockchain research. She said the National Institute of Standards and Technology (NIST) faced difficulties in researching Ethereum several years ago because it was prohibited from holding Ether, the blockchain’s native currency. If government agencies had access to a national crypto fund, she explained, they would be able to more effectively research, test and implement blockchain technologies.
Accusations of Favoritism
Some within the crypto community have accused Trump of leveraging the new reserve program to reward campaign donors who helped secure his and his Republican colleagues’ elections.
For instance, Ripple — the company behind XRP, which Trump plans to include in the reserve — donated $49 million to the pro-crypto political action committee Fairshake, and $5 million to Trump’s inauguration fund. Ripple is also one of several crypto companies that have been sued by the SEC over the years. However, many of those cases (some of which involve companies that gave money to Trump) have since been dropped. Officially, Ripple’s lawsuit is still ongoing, but rumors suggest it may soon be dismissed, too.
Potential Conflicts of Interest
Several people have also questioned Sacks’ potential conflicts of interest. Sacks said he sold all of his crypto holdings prior to taking office, but it’s unclear whether his venture capital firm Craft Ventures has done the same. Craft Ventures led a 2017 investment round in Bitwise, which manages crypto index funds with many of the assets included in Trump’s crypto reserve.
Others, like financial commentator and wealth advisor Peter Schiff, said the timing of Trump’s social media needs to be investigated by federal regulators. Trump’s son Eric, for example, posted five days before his father’s announcement to “₿uy the dips!!!,” replacing the “B” with the Bitcoin logo.
“I love the genius of announcing a strategic reserve on a Sunday, when traditional markets are closed and Wall Street sleeps,” Eric Trump posted after the reserve was announced. “For the first time, retail investors win.”
Though Trump was once a fervent critic of cryptic — calling it a “scam” with value “based on thin air” — the president now has several close ties to the industry. Not only did he receive billions of dollars in campaign donations from crypto investors and founders, but he also released his own memecoin shortly after his election. Trump and his sons are also involved in a cryptocurrency startup, World Liberty Financial, which sells its own token.
Frequently Asked Questions
What is the crypto strategic reserve?
The crypto strategic reserve is a proposal to hold cryptocurrency assets in a government fund as a hedge against inflation and monetary instability. Proponents argue that it could bolster the dollar’s value over time, but critics say speculative crypto assets are a risky investment for a country’s central bank.
What coins are in the strategic reserve?
President Donald Trump announced on social media that the U.S. strategic reserve would include bitcoin (BTC), Ether (ETH), Solana (SOL), XRP and Cardano (ADA).
