Donald Trump, President of America, announced a Strategic Bitcoin reserve, alongside a U.S. Digital Asset Stockpile. The executive order was signed on March 6 and marks a critical turning point in American adoption of cryptocurrency, with Trump aiming to make his country the center of crypto innovation worldwide.
On Friday, during the White House crypto summit, Trump told crypto delegates that he was living up to his promises and would continue to back crypto businesses in America.
“I promised”, said Trump, “to make America the bitcoin superpower of the world and the crypto capital of the planet and we’re taking historic action to deliver on that promise”.
The Bitcoin reserve is supplemented with a separate digital assets stockpile, addressing issues raised before the summit that a multi coin reserve may be an impracticable idea. Bitcoin was designed from the very start as an inflation resistant digital form of gold. It makes sense to solely use Bitcoin as a reserve currency because, unlike complicated Web3 tokens, has a simple design and therefore is less susceptible to security flaws.
“Bitcoin is special in our view,” said a Trump official, “It’s the original cryptocurrency. It’s the most secure; it’s never been hacked. It’s scarce; the bitcoin protocol limits the number to 21 million. It’s the most decentralized”.
David Sacks, White House crypto advisor, said that the Bitcoin reserve will be sourced from seized tokens related to criminal cases. Therefore, he promised, tax payers will not have to pay for the Bitcoin reserve. Further, the Federal Reserve does not have to sell gold either.
Sacks ordered an accounting of the current Bitcoin holdings, held by the U.S. government, estimating around 200,000 BTC worth $20 billion at the current price of $90,000 per Bitcoin.
The executive order does not exclude buying Bitcoin at a future date, in the event of adding more BTC to the future fund.
“The Secretaries of Treasury and Commerce”, according to the Executive Order, “are authorized to develop budget-neutral strategies for acquiring additional Bitcoin, provided that those strategies impose no incremental costs on American taxpayers”.
Reserve Bitcoin could protect America if digital currency replaces fiat money. The switch could happen at a future date and could leave countries at a disadvantage, if they failed to secure a Bitcoin reserve. Others argue that Bitcoin could be used to pay down the national debt. However, one may argue that as soon as America sells their Bitcoin, the price may go down.
The Executive Order, creating a Bitcoin Reserve, centralises a large amount of the token under American control. This comes as Trump aims to make America the center of crypto innovation in the world.
“Currently, no clear policy exists for managing these assets”, according to the Executive Order, “leading to a lack of accountability and inadequate exploration of options to centralize, secure, or maximize their value”.
Elizabeth Warren, Democrat politician, raised concerns about the reserve fund, suggesting that it could be an unfair programme designed to benefit the wealthy, while not doing enough for working class Americans. She wrote a letter to David Sacks, detailing her concerns.
There are even crypto supporters who are sceptical of the fund, pointing out that republicans spent millions of dollars backing the president and progressive crypto regulation. The alignment between government and crypto may even go against the original principles of crypto, to protect people from government self-interest.
