On Sunday, United States President Donald Trump declared his administration’s intention to establish a national strategic cryptocurrency reserve encompassing five different cryptocurrencies. He asserted his vision to transform the US into “the crypto capital of the world.”
In a message posted on his Truth Social platform, Trump mentioned that a crypto working group formed after his inauguration in January is actively working towards the reserve’s development, thereby fulfilling commitments he made to crypto advocates during his election campaign.
Following his announcement, the values of the specified cryptocurrencies, including Bitcoin, surged after a period of decline lasting several weeks.
This initiative precedes the inaugural White House Crypto Summit scheduled for Friday and signifies a significant shift in US policy. The previous administration under President Joe Biden had enforced stringent regulations on the crypto industry due to concerns over fraudulent activities. Notably, Trump himself expressed skepticism towards cryptocurrencies during his initial term in office, labeling Bitcoin—the leading cryptocurrency—as a “scam.”
However, in his Sunday address, Trump criticized the policies of the Biden administration, referring to them as “corrupt.”
Trump emphasized, “A crypto reserve will elevate this critical industry after years of corrupt attacks by the Biden administration… I will ensure that the US is recognized as the crypto capital of the world. We are making America great again.”
Here’s what you should know regarding the upcoming US crypto reserve:
What will the US crypto reserve comprise?
In his Sunday posts, Trump initially indicated that smaller cryptocurrencies—XRP, Cardano, and Solana—would be part of the national crypto stockpile.
However, about an hour later, he clarified in a separate post that “and obviously, BTC and ETH…will be at the core of the Reserve,” referencing Bitcoin and Ethereum, the two leading cryptocurrencies by market capitalization.
The markets reacted positively to this announcement, with Cardano’s price increasing by approximately 60 percent to $1.25 from around $0.65, according to the Coinbase crypto exchange—although it settled back to approximately $0.97 by Monday. Solana’s value climbed from around $150 to $170, while XRP surged from $2.25 to $3, with gains of roughly 12 and 20 percent, respectively.
Meanwhile, Bitcoin and Ethereum experienced increases of over 10 percent, with Bitcoin rising to $94,000 from $86,000.
During his campaign, Trump actively sought the support of the crypto industry and promised robust measures in favor of these currencies once elected. After his victory in November, the cryptocurrency market saw unprecedented growth—Bitcoin reached an all-time high of $109,000. However, the market slowed down subsequently.
In January, Trump and First Lady Melania Trump launched their own meme coins—digital currencies derived from viral trends but lacking the solid financial or technological foundations of actual cryptocurrencies.
Additionally, Elon Musk, who heads Trump’s government efficiency initiative, frequently endorses cryptocurrencies on his social media platform X (formerly Twitter).
What could be the purpose of a crypto reserve?
The ownership of digital currencies such as Bitcoin is increasingly recognized by governments as a viable alternative store of value, akin to gold, and serves as a hedge against inflation. However, some experts warn that the crypto market is highly volatile, with price fluctuations presenting a substantial risk when compared to gold.
Numerous countries holding digital currencies seized in criminal investigations might leverage cryptocurrencies as legal tender.
Switzerland is set to decide on crypto reserves following a public referendum, while Brazil, Germany, Hong Kong, Poland, and Russia are exploring or progressing towards establishing them.
The US government currently holds the largest cryptocurrency stash globally—200,000 Bitcoin—and Trump’s recent endorsement is viewed as likely enhancing the legitimacy of various coins. Should the US crypto reserve plans advance, it is plausible more nations will follow suit, given the US’s significant impact as the world’s largest economy.
Trump’s push for cryptocurrency will position the US at the forefront, granting it substantial influence over the future of international crypto regulations.
If the US government, through a reserve, retains a significant portion of the global crypto token volume, it could also help mitigate the price volatility currently associated with these digital currencies.
In July 2024, Republican Senator Cynthia Lummis introduced the Bitcoin Act in Congress, which required all government-held Bitcoin to be transferred to the US Treasury and advocated for establishing a crypto reserve. Lummis argued that such a reserve would enable the US to manage its existing Bitcoin holdings transparently.
“Bitcoin is not only transforming our nation but also the world, and becoming the first developed country to adopt Bitcoin as a savings technology solidifies our role as a leader in financial innovation,” she stated.
The bill is still under consideration.
What other strategic reserves does the US possess?
The only other strategic or emergency reserves owned by the US are its extensive oil stocks, known as the Strategic Petroleum Reserve (SPR), located in Louisiana and Texas.
The US government describes these reserves as “the world’s largest supply of emergency crude oil.” With a capacity of up to 714 million barrels, the crude is stored in underground salt caverns at four distinct sites along the Gulf of Mexico, monitored by the US Department of Energy.
Access to these crude reserves is rare; the last instance occurred in June 2011 when President Barack Obama ordered the release of 30 million barrels to address supply reductions caused by conflicts in Libya, a key oil producer. The reserves were established in 1975 following an oil embargo imposed by Arab nations on countries supportive of Israel during its 1973 war against Syria and Egypt.
Do other nations maintain crypto reserves?
Currently, only three countries recognize cryptocurrencies as legal tender:
- El Salvador: Since 2021, under President Nayib Bukele, this nation has embraced Bitcoin as legal tender, marking it as the first country to do so. Nevertheless, a January 2024 study by Yale researchers revealed that Bitcoin usage was limited. In January, the government reduced Bitcoin regulations, making it ineffective for tax payments and state bills. El Salvador currently holds approximately 6,088 Bitcoin in reserves, valued at around $558 million.
- Central African Republic: In 2022, the Central African Republic adopted Bitcoin as legal tender, although it’s uncertain how much they hold in reserves.
- Bhutan: In January, Bhutan’s Gelephu Mindfulness City initiated holding cryptocurrencies like Bitcoin and Ethereum in strategic reserves. Bhutan reportedly mines and possesses approximately 11,000 Bitcoin, valued at about $1.1 billion according to Arkham Exchange.
Additionally, several countries possess cryptocurrencies like Bitcoin, primarily seized through law enforcement operations linked to criminal activities. The holdings from various countries include:
- United States: Holds about 200,000 Bitcoin, the highest country holding globally, valued at approximately $16.7 billion, according to Bitcoin Treasuries, a trading platform.
- China: Currently, crypto transactions are prohibited in China due to regulatory challenges. The Chinese government is in the process of developing its own digital currency, supported by the central bank. Currently, China owns about 194,000 Bitcoin, valued at roughly $16.2 billion (as of March 4), obtained from Ponzi scheme-related seizures.
- United Kingdom: The UK government retains approximately 61 Bitcoin seized from international money laundering activities, estimated to be worth $5 million.
- Ukraine: Holds around 1,200 Bitcoin received from public donations in response to the ongoing war with Russia, valued at approximately $100 million.
- Finland: Owns about 890 Bitcoin—valued at an estimated $74 million—arising from narcotics trafficking investigations.
- India: Holds 450 Bitcoin obtained during crypto fraud investigations, estimated at $37 million.
