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Bitcoin Strategic Reserve Established by President Trump
President Donald Trump has directed his administration to establish a Bitcoin Strategic Reserve to hold the assets that have been seized by the government. The administration has also called for a crypto stockpile of other types of assets.
All of the assets contemplated by the order would be those seized in civil or criminal forfeitures. The bitcoin will be stored for long-term value in what was termed a “digital Fort Knox.”
“The Reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings,” said David Sacks, Trump’s crypto czar, in a statement posted on social media site X.
In a video showing the president signing the order, Trump says about establishing the reserve, “Made the promise, right?”
The order has also nudged government officials to seek ways to add more bitcoin to the reserve, as long as it doesn’t harm the federal budget.
“The Secretaries of Treasury and Commerce are authorized to develop budget-neutral strategies for acquiring additional bitcoin, provided that those strategies have no incremental costs on American taxpayers,” Sacks said.
The assets for the non-bitcoin stockpile will be any crypto that the government otherwise seizes. Sacks didn’t highlight any particular asset names in that category, despite some being recently highlighted by the president.
Market Reaction
Bitcoin fell nearly 5% to $85,000 in the minutes following the order, perhaps over disappointment that the reserve consists of tokens already held by the government, but — for now — includes no new buys.
Ethereum’s (ETH), Ripple’s (XRP), Cardano’s (ADA), and Solana’s (SOL) are all lower by 4%-8% over the past hour as the order allows for no fresh government purchases of those tokens.
Matt Hougan, the chief investment officer for Bitwise Asset Management, said in a post that the move to set up a bitcoin reserve reduces the chance the government can ever try to outlaw the asset, and it “dramatically increases the likelihood that other nations will establish strategic bitcoin reserves.”
But Charles Edwards, founder of Bitcoin-focused hedge fund Capriole Investments, called it the “most underwhelming and disappointing outcome we could have expected for this week,” arguing that without a buying plan, the strategy is a “pig in lipstick.”
Conclusion
The establishment of a Bitcoin Strategic Reserve by President Trump is a significant move that has sent shockwaves through the crypto market. The reserve will hold assets seized by the government, including bitcoin, and will also seek to add more bitcoin to its holdings without harming the federal budget. While some experts have expressed disappointment with the lack of a buying plan, others see the move as a positive step towards establishing a stable and secure store of value for the asset.
FAQs
- What is the purpose of the Bitcoin Strategic Reserve? The reserve is to hold assets seized by the government, including bitcoin, and to add more bitcoin to its holdings without harming the federal budget.
- How will the reserve be capitalized? The reserve will be capitalized with Bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings.
- Will the reserve buy more bitcoin? The order has nudged government officials to seek ways to add more bitcoin to the reserve, as long as it doesn’t harm the federal budget.
- How will the market react to the reserve? The market has reacted negatively, with bitcoin falling nearly 5% in the minutes following the order, and other cryptocurrencies such as Ethereum, Ripple, Cardano, and Solana also experiencing declines.
- What are the implications of this move for the crypto market? The move could have significant implications for the crypto market, including potentially reducing the chance of government attempts to outlaw the asset and increasing the likelihood of other nations establishing strategic bitcoin reserves.
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