Trump Establishes Government Cryptocurrency Reserves Amid Mixed Reactions
By Annabelle Liang & Liv McMahon, Business & Technology Reporters
President Donald Trump has recently signed an executive order aimed at establishing official government cryptocurrency reserves in the United States, a move that has sparked a debate among industry watchers. The initiative introduces what Trump refers to as a "Strategic Bitcoin Reserve" along with a "Digital Asset Stockpile" that will include other forms of digital currencies.
A New Approach to Crypto Reserves
The proposed reserves will be funded by coins that are forfeited to the federal government as a result of criminal or civil proceedings. David Sacks, the White House’s appointed AI and cryptocurrency advisor, likened the new initiatives to a "digital Fort Knox," referencing the well-known Kentucky military base that houses a significant portion of U.S. gold assets.
In a briefing prior to a special crypto summit scheduled for Friday, Sacks stated that it was a "real shame" that the government had not previously maximized the value of its cryptocurrency holdings for American taxpayers. He indicated that a full accounting of existing federal crypto reserves had been ordered, with an estimated 200,000 Bitcoin currently held, valued at approximately $17.5 billion (£13.6 billion).
Criticism Surrounding Transparency and Boldness
While some crypto enthusiasts have applauded the initiative, calling it a step in the right direction, many have criticized the administration for what they perceive as a lack of boldness. Charles Edwards from the Capriole Fund referred to the announcement as "a pig in lipstick," emphasizing that no active buying of Bitcoin is occurring, thus rendering it merely a new label for the government’s existing Bitcoin assets.
Trump’s executive order stipulates that the Treasury and Commerce secretaries will develop strategies for acquiring additional government Bitcoin, but these plans must be "budget neutral," meaning they cannot add to the national deficit or debt. Sacks clarified that this restriction means the government would only procure more Bitcoin if doing so does not result in financial strain on taxpayers.
Jason Yanowitz, co-founder of crypto firm Blockworks, expressed concern over the inclusion of various cryptocurrencies in the digital asset stockpile. He argued that without a clear framework, this could lead to arbitrary asset selections, potentially distorting markets and undermining public trust.
Support for the Initiative
Despite the criticism, some analysts have voiced positive sentiments regarding the approach. Russ Mould, investment director at AJ Bell, stated that this method of maintaining existing assets is more sensible than purchasing crypto directly. He highlighted that it would be unusual for the U.S. government to sell dollars to acquire cryptocurrencies, considering the dollar’s status as the global reserve currency.
At the upcoming crypto summit, further details about the initiative are expected to be unveiled. While the specific benefits of the proposed crypto reserve for American citizens remain unclear, Sacks assured reporters that the initiative "will not cost taxpayers a dime." However, uncertainties linger over potential legal challenges or the need for Congress to approve the reserve.
Maintaining a Stable Cryptocurrency Environment
The U.S. government has made it clear that it does not intend to sell any Bitcoin in the reserve but will keep it as an asset. Meanwhile, other cryptocurrencies will be stored in a separate stockpile. Trump’s prior announcement this week on five cryptocurrencies he wishes to include in the strategic reserve also drew attention, with their market prices fluctuating in response.
Yanowitz cautioned the government to avoid appearing to favor certain cryptocurrencies over others. He stressed that ensuring transparency through independent audits and public reporting is essential for fostering innovation within the crypto sector.
In a move toward accountability, Sacks indicated that each governmental department, including intelligence agencies, would be required to audit and self-report their cryptocurrency holdings, with no exceptions thus far.
As the crypto landscape continues to evolve, the announcement underscores a pivotal moment for U.S. cryptocurrency policy. With Trump previously courting the crypto community during his presidential campaign, the administration’s latest efforts suggest a renewed interest in harnessing digital currency’s potential, diverging starkly from the more cautious approach taken by former President Joe Biden, who emphasized regulatory measures to mitigate fraud.
Additional reporting was contributed by Bernd Debusmann Jr. at the White House.
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