Trump Establishes U.S. Cryptocurrency Reserves Amid Criticism from Industry Experts
By Annabelle Liang & Liv McMahon, Business & Technology Reporters
In a bold move that has sparked widespread debate, President Donald Trump has signed an executive order to establish government cryptocurrency reserves in the United States. This decision, unveiled just ahead of a special crypto summit scheduled for Friday, aims to create a Strategic Bitcoin Reserve and a separate Digital Asset Stockpile, which will incorporate various forms of digital currencies.
Overview of the Executive Order
The executive order outlines a plan for the federal government to stockpile cryptocurrency, particularly Bitcoin, which will come from coins that have been forfeited to the government through criminal investigations or other legal proceedings. White House AI and crypto advisor David Sacks characterized this initiative as a "digital Fort Knox for cryptocurrency," drawing comparisons to the fortification in Kentucky that safeguards a significant portion of America’s gold reserves.
Sacks revealed that the U.S. government’s existing cryptocurrency holdings are substantial, estimating approximately 200,000 Bitcoin worth nearly $17.5 billion (£13.6 billion) at current market prices. He emphasized the administration’s goal to enhance these reserves in a manner that is "budget neutral," meaning any future acquisitions must not increase the federal deficit or debt.
Responses from the Crypto Industry
The announcement has drawn mixed reactions from cryptocurrency experts and enthusiasts. While some praised the notion of a national Bitcoin reserve, others expressed concerns about the government’s approach. Charles Edwards, a hedge fund manager at Capriole Fund, critiqued the initiative, calling it “a pig in lipstick,” suggesting that it lacks real substance as there is no active buying of Bitcoin planned.
Jason Yanowitz, co-founder of crypto firm Blockworks, echoed similar concerns, noting that diversifying into other cryptocurrencies in the reserves could set a "horrible precedent." He expressed worries that such actions might lead to arbitrary asset selections, which could disrupt market integrity and erode public trust in the government’s decisions.
Conversely, investment director at AJ Bell, Russ Mould, offered a more optimistic perspective. He believes that maintaining a reserve makes more strategic sense than outright purchasing cryptocurrencies, especially considering the U.S. dollar’s status as the world’s reserve currency.
No Bitcoin Sales Planned
According to Sacks, the initiative will not result in the sale of any Bitcoin held in the reserve. Instead, these digital assets will be retained as long-term holdings, while other cryptocurrencies will form a separate stockpile. The White House appears to be keen on transparency, with mandates that require each governmental department—including intelligence agencies—to audit and report their cryptocurrency holdings.
However, specific details regarding how these reserves will ultimately benefit American taxpayers remain unclear. Nonetheless, Sacks reassured reporters that the reserve initiative "will not cost taxpayers a dime."
Future Uncertainty and Legislative Considerations
As the initiative unfolds, there remain questions about potential legal challenges it may encounter or whether it would need congressional approval to advance. In a previous announcement, Trump outlined five cryptocurrencies—Bitcoin, Ethereum, XRP, Solana, and Cardano—that he intends to include in the strategic reserve. Market reactions to these statements were swift, causing a spike in the prices of the mentioned digital currencies.
Moving forward, the government’s cryptocurrency strategy will be critical in shaping the landscape of digital assets in the U.S. and maintaining its competitive edge globally. As Trump continues to engage with the cryptocurrency community, the contrast between his administration’s stance and previous initiatives under President Biden—which emphasized regulatory crackdowns—marks a significant shift in the political approach to digital currencies.
Further announcements and clarifications are expected during the upcoming White House crypto summit, where additional insights into the administration’s plans will be shared, potentially impacting both market and public sentiment surrounding cryptocurrency reserves in the United States.
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