Trump establishes US strategic bitcoin reserve with executive order

US President Donald Trump recently made a significant move in the cryptocurrency sector by signing an executive order to establish a strategic reserve of cryptocurrencies. The plan involves utilizing existing government-owned tokens rather than purchasing new ones. This decision, announced in advance of a meeting with crypto industry leaders, resulted in a 5% decrease in the price of Bitcoin, dropping it down to $85,000, though it quickly rebounded to $89,200 during early European trading hours.

The newly introduced “Strategic Bitcoin Reserve” will be funded with bitcoins acquired through criminal or civil asset forfeiture proceedings, as detailed by White House crypto czar David Sacks. The executive order also allows for the potential purchase of additional bitcoins in the future. The US commerce and treasury secretaries have been granted authority to formulate budget-neutral strategies for obtaining more bitcoins without imposing financial burdens on American taxpayers.

Andrew O’Neill, the managing director of digital assets at S&P Global Ratings, emphasized the symbolic significance of this directive. He highlighted that this establishment represents the formal recognition of Bitcoin as a reserve asset by the US government for the first time. However, the reserve will solely consist of bitcoins already in the possession of the government, with no clear indication of the quantity or timeline for acquiring additional assets.

Previously, President Trump’s assurances regarding a strategic reserve and favorable regulations had driven up the value of Bitcoin significantly, peaking at a record high of $109,071.86 in January. Although some like Charles Edwards, founder of Capriole Investments, expressed disappointment, referring to it as merely a rebranding of existing Bitcoin holdings, the executive order sheds light on the government’s intentions in the digital asset arena.

In addition to the Bitcoin Reserve, a separate initiative involving the creation of a “US Digital Asset Stockpile” has been announced. This undertaking will encompass various tokens besides Bitcoin, although it will not expand beyond assets acquired through forfeiture processes. Simultaneously, Trump has identified five digital assets, including bitcoin, ether, XRP, solana, and cardano, as candidates for inclusion in the government reserve. The mention of these tokens led to an upsurge in their market values, garnering attention from participants present at the White House crypto summit.

Further details provided by Sacks reaffirmed that there are no plans to offload any digital assets in the reserve. This strategic move by the US government reflects a dynamic shift in recognizing and capitalizing on the opportunities presented by cryptocurrencies as part of its national financial strategy. While speculation remains surrounding potential future additions to the reserves and the formalization of Trump’s plans, the proposed developments signal an evolving landscape for digital assets within the realm of government-held reserves.