President Donald Trump has issued an executive order that establishes a government reserve of bitcoin, marking a significant step towards the cryptocurrency’s potential mainstream certification. The directive mandates that the U.S. government will retain approximately 200,000 bitcoins already confiscated through criminal and civil procedures. According to Trump’s “crypto czar,” David Sacks, this move aims to establish a digital Fort Knox, securing bitcoin as a store of value rather than allowing its sale.
In line with this initiative, the executive order requires an exhaustive audit of the federal bitcoin holdings, which Sacks states have been somewhat opaque until now. Historically, the government has liquidated around 195,000 bitcoins in the past decade for a sum of $366 million; Sacks pointed out that if unsold, these bitcoins would be valued at approximately $17 billion today. The order also empowers the Treasury and Commerce Departments to craft budget-neutral methods for acquiring more bitcoin.
Trump’s position on cryptocurrencies has evolved over the years. Once a detractor who labeled bitcoin a “scam,” he has now championed digital currencies and taken up the mantle of the “crypto president.” This stance could potentially benefit the crypto sector while possibly offering financial gains for himself and his family. Many affluent individuals within the crypto world supported Trump during his electoral campaign, especially after feeling unfairly treated by the previous administration.
Creating a bitcoin reserve was among the multiple crypto-centric pledges Trump made last year. He has also advocated for pro-industry laws to be passed by Congress, and under his leadership, the Securities and Exchange Commission (SEC) has commenced retracting enforcement activities against certain major cryptocurrency firms. To reinforce this objective, Trump will host various industry leaders at a White House “Crypto Summit.”
Bitcoin, designed in response to the financial meltdown of 2008 by an unidentified creator, stands as the most renowned and established cryptocurrency. Initially an experiment by libertarian cryptography aficionados, it has evolved into an asset class with a market cap nearing $1.7 trillion. Although not yet popular for everyday transactions, it has been embraced as a value store untethered by banks, governmental, or other authoritative forces. With its maximum supply capped at 21 million coins, proponents argue bitcoin acts effectively as a hedge against inflation. Whilst facing criticism over perceived lack of intrinsic value, it has repeatedly exceeded expectations with notable price appreciations. Some advocates even propose that a strategic bitcoin reserve might assist in addressing the U.S. national debt.
Following Trump’s electoral win, the prices of cryptocurrencies soared, and as bitcoin surpassed the $100,000 threshold in December, Trump took to social media, exclaiming “YOU’RE WELCOME!!!” However, the market has since stabilized. The executive order did not cause an immediate spike for bitcoin, which remained around $86,000 post-announcement.
The order also initiates a “U.S. Digital Asset Stockpile” to store cryptocurrencies acquired by the government other than bitcoin. Recently, there was an unexpected announcement by Trump about the government possibly holding smaller cryptocurrencies such as XRP, solana, and cardano, leading to a brief surge in crypto prices.
