On Sunday, President Donald Trump laid out plans to potentially fulfill a promise to the Silicon Valley cryptocurrency backers who invested millions into his Super PAC for his 2024 campaign. In an effort to ensure the U.S. becomes the “Crypto Capital of the World,” he announced on Truth Social that his administration aims to establish a “U.S. Crypto Reserve” as part of an executive order that promotes the development of digital assets. This reserve, he indicated, would encompass well-known cryptocurrencies including Bitcoin and Ethereum, as well as tokens like XRP, Solana, and Cardano.
The exact nature of this strategic reserve remains uncertain, particularly whether the government would acquire cryptocurrencies for the reserve using taxpayer money—such a move would theoretically require Congressional approval. Nevertheless, the news buoyed blockchain enthusiasts. Currencies that had experienced gains since Trump’s election but had recently declined surged again, with Bitcoin experiencing a notable 10 percent increase.
However, the optimism was short-lived as Trump announced on Monday that stiff tariffs on imports from Canada and Mexico were forthcoming. This news triggered significant losses on Wall Street, with crypto tokens also seeing their recent gains swiftly erased. By Monday afternoon, Bitcoin, Ethereum, Solana, and XRP had reverted to their prior values, while Cardano lost about 20 percent of its peak worth.
Even before these losses, experts expressed skepticism regarding the potential advantages of a national crypto reserve. Some industry insiders were concerned that the White House’s interest in including more volatile currencies could be problematic. (In a subsequent post following his initial announcement, Trump clarified that Bitcoin and Ethereum would be included in the reserve’s assets, seemingly to alleviate concerns.) Economists have characterized the crypto reserve concept as beneficial for crypto investors, but risky for average taxpayers. A few journalistic critics have even labeled it as blatant corruption—pointing out that Trump’s crypto advisor, David Sacks, a tech venture capitalist and associate of Elon Musk, holds investments in the five cryptocurrencies mentioned on social media.
Sacks defended his position on X, citing part of a Financial Times article that stated he and his firm, Craft Ventures, had sold their direct cryptocurrency holdings “shortly after Trump’s inauguration.” The article specifies that Craft still retains stakes in various crypto startups. Sacks claimed he divested from Bitcoin, Ethereum, and Solana, though he provided a slightly different timeline, stating that he sold these assets “before the administration began.” A Community Note in response to his post highlighted that Craft is an investor in asset management firm Bitwise, whose CEO disclosed on Sunday that their top five positions align with the same five cryptocurrencies Trump mentioned.
Sacks, whose government ethics review is ongoing, also countered Joe Lonsdale, another affluent venture capitalist and Trump supporter, who criticized Trump’s crypto reserve idea on X, arguing that “Taxation is theft. It should be minimized. It’s wrong to take my money for leftist schemes; it’s equally wrong to tax me for the crypto ambitions.” Sacks replied, “No one announced a tax or spending initiative. Perhaps you should wait and see what is actually being proposed.”
One challenge in clarifying the details of a potential reserve is that minimal information has been disclosed beyond the diverse asset mix. Even within the crypto trading community, there is hesitance regarding the idea of the federal government purchasing more Bitcoin with Treasury funds, a tactic that could backfire if the value of the digital currency were to drop dramatically. An alternative suggestion gaining some traction is for the U.S. to accumulate the billions in Bitcoin seized through law enforcement efforts, rather than liquidating it, although this presents its own logistical challenges. The White House is scheduled to host its inaugural crypto summit on Friday, with Sacks indicating on his official government X account that the gathering will convene “notable founders, CEOs, and investors from the crypto sector.”
Meanwhile, there’s a pervasive sense of impropriety where the Trump administration and the cryptocurrency market intersect. The Trump family’s first crypto venture, World Liberty Financial, was launched in 2024 and quickly attracted the attention of prominent Chinese crypto entrepreneur Justin Sun. The Securities and Exchange Commission filed a lawsuit against Sun in 2023, accusing his companies, Tron and Rainberry (formerly known as BitTorrent), of fraudulently manipulating crypto markets and unlawfully compensating celebrities like Lindsay Lohan, Jake Paul, and rapper Soulja Boy to promote tokens without revealing their financial incentivization. However, just last week, after Sun accumulated a $75 million stake in World Liberty Financial tokens, the Trump SEC moved to suspend the fraud case against him. The project’s documentation indicates that the Trumps stand to earn 75 percent of the profits from those tokens.
Additionally, just before the president’s January inauguration, the Trump team introduced two so-called meme coins, $TRUMP and $MELANIA (named after the First Lady), which were fraught with ethical dilemmas, annoyed industry leaders who believed they undermined crypto legitimacy, and resulted in significant financial losses for supporters while the Trumps profited by millions in fees. Meme coins hold no inherent value or purpose; they are often based on popular culture and trends, with investors hoping to drive prices up through viral marketing cycles.
Although not intended for inclusion in a national reserve, $TRUMP gained value following the reserve announcement but subsequently plummeted.
Last week, Sacks highlighted new directives from the SEC concerning such assets, which saw the departure of numerous top officials while commissioner Mark Uyeda, a crypto-friendly Republican, was appointed as acting chairman.
“Meme coins are typically purchased for entertainment, social interaction, and cultural reasons, with their value primarily driven by market demand and speculation,” noted a staff statement from the SEC’s Division of Corporation Finance dated February 27. “In this context, meme coins resemble collectibles.” The division further asserts that offerings of meme coins are not subject to federal securities regulations, transactions do not need to be registered with the SEC, and “neither meme coin buyers nor owners are offered protection” under the agency’s regulations. The statement also remarks, “The offer and sale of meme coins does not constitute an investment in a business nor is it pursued with a genuine expectation of profits arising from the efforts of others.”
This stance would likely exempt Trump from any liability regarding buyers who suffer losses due to $TRUMP or $MELANIA—though he arguably doesn’t require further immunity as the current president. Nevertheless, it starkly illustrates how federal agencies, purged of their career staff, have sought to overlook conflicts of interest concerning Trump and his technology billionaire allies. It would not be surprising if the anticipated crypto reserve is designed to primarily benefit them as well.
