In a surprising move, President Donald Trump has signed an executive order to create a strategic reserve for Bitcoin and other cryptocurrencies, marking a significant shift in his stance on digital assets.
President Donald Trump has signed an executive order to create a strategic reserve for Bitcoin and other cryptocurrencies. This move makes the US one of the few countries with a national stockpile of blockchain assets.
What is the Purpose of the Reserve?
The reserve will hold cryptocurrency forfeited to the federal government as part of criminal or civil proceedings. According to David Sacks, White House AI and crypto tsar, the US will not sell any Bitcoin deposited in the reserve, but instead keep it as an asset.
A Shift in Trump’s Stance on Cryptocurrency
Just four years ago, President Trump described Bitcoin as ‘seems like a scam.’ However, he now plans to make the US ‘the Crypto Capital of the World.‘ This change in stance is evident in his plan to host the first crypto summit at the White House on Friday.
The Reserve: A Digital Fort Knox
Sacks compared the stockpile to a digital version of Fort Knox, which stores a significant portion of US gold assets. The reserve will not only hold Bitcoin but also other cryptocurrencies that have been forfeited. Trump’s order also directs a full accounting of the federal government‘s crypto reserves, estimated at 200,000 Bitcoin alone, worth $17.5bn at today’s prices.
A cryptocurrency reserve is a digital wallet that stores and manages a collection of 'cryptocurrencies'.
It allows individuals, businesses, and institutions to securely hold and transfer various 'cryptocurrencies', such as Bitcoin, Ethereum, or others.
Cryptocurrency reserves often provide additional features like multi-signature wallets, cold storage, and audit trails for enhanced security and transparency.
According to a recent survey, over 70% of cryptocurrency exchanges maintain reserves to ensure smooth transactions and customer fund safety.
Benefits to Americans
While it is unclear how this new stockpile will benefit Americans, Sacks assured that it ‘will not cost taxpayers a dime.’ However, his statement that the US government would not buy Bitcoin led to a price drop of more than 5% in the world’s largest cryptocurrency.
Bitcoin is a decentralized digital currency that allows for peer-to-peer transactions without the need for intermediaries.
It was created in 2009 by an individual or group using the pseudonym Satoshi Nakamoto.
Bitcoin uses cryptography to secure and verify transactions, and its supply is capped at 21 million coins.
The network is maintained by a global community of miners who validate transactions and add them to the public ledger called the blockchain.
A Strategic Move by the US Government
The establishment of a crypto strategic reserve is similar to other countries maintaining reserves of national assets to diversify government holdings and hedge against financial risk. The US also keeps a petroleum reserve, while Canada has a maple syrup reserve.
