President Donald Trump is placing a significant wager on bitcoin, harnessing the full power of the U.S. government.
Trump signed an executive order late Thursday that establishes a strategic bitcoin reserve for the United States, positioning the cryptocurrency alongside petroleum and gold as strategic assets stockpiled by Washington. David Sacks, who serves as Trump’s crypto and AI advisor, further elaborated on the concept. “The Reserve is akin to a digital Fort Knox for the cryptocurrency often referred to as ‘digital gold,’” Sacks stated in a post on X.
In recent years, a multitude of digital currencies with varying prices, credibility, and value has emerged, but bitcoin remains the trailblazer and the most widely embraced. Established in 2008 by an unidentified individual or group using the name Satoshi Nakamoto (whose identity is still a mystery), bitcoin was introduced as a peer-to-peer virtual currency capable of functioning outside the traditional financial system. Although it has not yet achieved the universal payment status its early advocates anticipated—partly due to its remarkable volatility—it has become a sought-after investment, comparable to stocks.
Sacks estimated that the U.S. government currently possesses about 200,000 bitcoin (approximately valued at $17.5 billion based on current prices). This existing bitcoin, seized by law enforcement during crackdowns on illicit activities, will constitute the reserve, with additional confiscated cryptocurrencies being integrated into a “digital asset stockpile” also established by the executive order.
“This means it won’t cost taxpayers a penny,” Sacks remarked, presumably to alleviate worries concerning potential fraud and corruption resulting from using taxpayer dollars to purchase cryptocurrency on the open market.
“There was immense pressure to purchase new bitcoin” prior to the decision to only utilize already-confiscated assets for the reserve, noted David Gerard, a contributor to Foreign Policy and author of Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts. “I expect that pressure will persist,” he added. However, he cautioned that “this still establishes a remarkable—and foolish—foothold for crypto in government.”
Concerns were raised—both initially and persistently—that Trump might employ government funds to artificially inflate the prices of particular crypto assets owned by many of his campaign supporters, constituting a form of insider trading. (Sacks has indicated that he sold all his cryptocurrency holdings upon joining the Trump administration.)
Earlier this week, Trump ignited those concerns through a Truth Social post made on the first Sunday of March, announcing a broader and unified “Crypto Strategic Reserve” that would encompass popular digital currencies such as bitcoin and ethereum, alongside lesser-known assets like XRP, solana, and cardano—two of which are presently priced below $3 each. That initiative, perhaps to the relief of some committed crypto advocates who were anxious about U.S. government funds being used to acquire more speculative digital assets, seems to have been set aside in favor of focusing solely on a bitcoin reserve.
More information is anticipated to be released on Friday when the White House hosts a crypto summit featuring prominent industry leaders and investors.
Numerous industry figures contributed millions to Trump’s presidential campaign and inaugural fund, assisting in the transformation of a president who once labeled bitcoin a “scam” into one now expressing a desire to position the United States as “the crypto capital of the world.”
In a somewhat controversial move, Trump launched his own cryptocurrency venture called World Liberty Financial last year. The company’s website lists the president and his three sons, Donald Jr., Eric, and Barron, as part of its leadership team, along with Steve Witkoff—currently the chief U.S. envoy to the Middle East—and his sons Zach and Alex. Furthermore, Trump introduced a “memecoin”—characterized by Coinbase as “a type of cryptocurrency often inspired by internet memes, characters, or trends” and usually associated with entertainment rather than practicality—named $Trump just days before his inauguration, with first lady Melania Trump unveiling hers two days later.
Under Trump’s administration, the U.S. Securities and Exchange Commission (SEC), which has taken the lead on cryptocurrency regulation, has adopted a noticeably more crypto-friendly stance. Last month, the SEC suspended its fraud case against 34-year-old Chinese crypto entrepreneur Justin Sun, who invested $75 million into Trump’s crypto enterprise. The SEC also refrained from enforcement actions against cryptocurrency exchanges Coinbase and Binance, and has established a new crypto task force to “recommend practical policy measures designed to foster innovation and safeguard investors.” Trump’s nominee to lead the SEC, Paul Atkins, is also widely regarded as pro-crypto.
“The SEC spent the last eight years under both the first Trump administration and the Biden administration combatting crypto, as it was all quite evidently securities fraud by legal standards,” Gerard remarked. “This is simply blatant kleptocracy. This is corruption. It appears as such.”
For many optimistic crypto advocates, the existence of a strategic reserve for bitcoin that doesn’t necessitate the purchase of new assets is an ideal scenario. (Others seemed to have anticipated government purchases, which likely explains the nearly $5,000 drop in bitcoin’s price immediately following the Trump administration’s announcement.)
“I’m honestly surprised that this has actually manifested,” stated Avichal Garg, co-founder and general partner at the crypto-centric investment firm Electric Capital. “As someone who has been in this domain for quite a while, it’s just crazy that the U.S. government will now hold onto bitcoin and not sell it,” he added.
For Garg, advocating for a strategic bitcoin reserve is straightforward. He notes that unlike other cryptocurrencies, the SEC has long regarded bitcoin as a commodity rather than a security—its global market value surpassing $1.7 trillion. This designation allows it to be treated more like tangible, tradable goods such as oil, gold, or grain, rather than financial instruments like stocks or bonds.
“I believe it has now crossed the threshold as a global commodity, and shifting focus from gold to some other scarce commodity is logical,” Garg expressed. “This is the only asset that is mathematically guaranteed, making it intuitively sensible.”
The United States wouldn’t be the first nation to create a bitcoin reserve. El Salvador famously (and controversially) enacted such a measure as part of President Nayib Bukele’s initiative to make bitcoin legal tender, with Bhutan recently following suit.
“Once smaller nations started doing it, it was only a question of time before the larger ones followed suit, so I think it’s indeed wise for the U.S. to take the lead,” Garg contended. He argued that on a global scale, there are few drawbacks to bitcoin adoption. “Either others will follow suit, in which case the U.S. will benefit from all the appreciation, or no one else will, and it didn’t cost anything in the first place.”
The more pressing question, however, is whether the United States actually needs to amass cryptocurrency. “We maintain strategic reserves for items we might require in emergencies that we may not be able to purchase on the open market. We do not stockpile financial assets,” stated Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics who studies digital currencies. “I can’t visualize a scenario where it would be impossible for the U.S. to acquire bitcoin if necessary, but I am also uncertain about what potential circumstance might compel the U.S. government to buy bitcoin in an emergency.”
Simply holding onto bitcoin and other cryptocurrencies seized by law enforcement may prove counterproductive, according to Chorzempa. “The issue is that we seem to be dropping most of our cases involving crypto fraud, and one individual who operated a drug marketplace using cryptocurrency has already been pardoned, so the extent to which we will continue seizing crypto may not be as significant as anticipated,” he mentioned, adding that the opportunity cost renders it much like using taxpayer dollars. “Functionally, that equates to issuing debt to do so, because rather than raising funds for other uses, it would be tied up in crypto, thereby incurring associated interest costs.”
Gerard bluntly expressed his view. “There is no justification for a strategic bitcoin reserve,” he asserted. “It appears to be an irrational idea, primarily because it is.”
However, to Garg, one aspect remains clear. “This definitively indicates that crypto is here to stay. It’s challenging for me to envision a scenario where bitcoin falls to zero at this point,” he stated. “Until recently, one could argue that bitcoin was highly speculative and volatile, even likening it to a Ponzi scheme.” Nevertheless, he noted, “Ponzi schemes with government involvement typically endure for an extended period.”
