Trump’s Bitcoin Reserve: Update
Several weeks ago, President Trump announced he would be creating a strategic Bitcoin reserve. Although several experts immediately discredited the idea, Trump moved forward anyway. Now, it has been several weeks since the announcement, and we wanted to update you on how it is going.
In our opinion, a Bitcoin reserve likely won’t be a reality for the US for a long time, and if it is, the regulatory nightmare surrounding it would render it practically ineffective. Keep reading to learn more.
What is a Bitcoin Reserve?
A Bitcoin reserve would be a Bitcoin edition of the Federal Reserve. This is money that the US government sets aside to help assist the country in a banking crisis—well, at least the Federal Reserve is. We aren’t sure just when a Bitcoin reserve will be used.
Although Trump his calling his reserve a Bitcoin reserve, there have been mentions that he would include other cryptocurrencies, including stablecoins. We are unsure if this will actually come to fruition or not.
How Will the Bitcoin Reserve Be Financed?
According to statements made by President Trump, the Federal Bitcoin Reserve will be funded with cryptocurrency that has been forfeited to the government. Although this sounds a bit crazy, cryptocurrencies are often surrendered to the US government during court proceedings.
Some examples include the Silk Road fiasco and the Sam Bankman-Fried court case. According to records, the US government currently holds 200,000 coins. The type and value of these coins are not specified, but other sources indicate that records show the US government holds at least 198,109 BTC, with a current value exceeding $19 billion.
For clarity purposes, the US government has been cleared to sell most of their BTC holdings, however they have not, which causes experts to have questions about just what the US government plans to do with it.
Why Does Trump Even Want a Bitcoin Reserve?
Trump publicly states that a Bitcoin reserve would be good for the future of the United States, but we truly don’t trust that. We know that cryptocurrency companies paid heavily for his re-election campaign, and we suspect that this was their ask.
Why are we so sure? Well, for one, Trump doesn’t really understand cryptocurrency or its uses. Second, the US government is starting to have issues with its debt, something selling the US government’s BTC holdings would 100% help. $19 billion is no paltry sum.
What are the Problems With a Bitcoin Reserve?
Of course, with the announcement of the cryptocurrency reserve, many experts and critics appeared concerned about a number of aspects. Below are some of the biggest concerns we have heard, though there are likely many more.
1. Transparency
Remember, the US Government was designed by the people for the people (even as that has become less and less over the preceding years), and many individuals are worried that a cryptocurrency reserve wouldn’t be as transparent as a fiat one.
This is a valid concern, as cryptocurrency functions differently than fiat, and while most cryptocurrency is traceable, some isn’t—giving the US government a way to spend the federal reserve without the people knowing.
We also have to mention that the purpose of Bitcoin was to have a decentralized currency. If the US government has a reserve, they can, in theory, control the supply, thus ruining the original purpose of Bitcoin.
2. The Government is Talking About Buying More?
Although Trump originally stated that the funds in the crypto reserve would all come from seizures, he has also spoken about purchasing more—something the already stressed US budget simply cannot handle.
This is also detrimental when you consider that the US could sell the current holdings to help alleviate debt…but they’re not.
3. International Legal Hurdles
Unfortunately, government-sized Bitcoin experiments have not been going as well as hoped. A prime example of this is the failed BTC experiment in El Salvador. Thus, experts believe that the US will face issues as it sets up its Bitcoin reserve on the global level.
We don’t know enough to comment on this issue specifically, but we do know that the IMF is currently glaring down at Bitcoin, so it probably isn’t the right time to set up a Federal Reserve of it.
4. Type of Token Issues
Many experts admit that if this fund were just for Bitcoin, it would be far simpler and less risky to implement. However, as we mentioned above, Trump plans to include all cryptocurrencies, namely the large ones such as Ethereum, Cardano, Ripple, and Solana.
This only causes further issues as experts question how cryptocurrencies will be chosen if this is the case and how the government can be sure it isn’t picking favorites. Additionally, while all cryptocurrencies are volatile, most are more volatile than Bitcoin, exposing the US government to a high level of investment risk.
5. Conflict of Interest
Trump and many of his family members have spent the past several months announcing their own memecoin launches. One of which just announced to have raised over $550 million US dollars.
Many Americans who don’t trust Trump say this has fed into their concerns over a cryptocurrency reserve, as they don’t believe Trump will remain impartial. They also believe that he may be doing this for personal gain—which, to be honest, we can’t be sure of either.
Of course, Trump wouldn’t control the Bitcoin reserve entirely, but at this point, the lines between Trump’s personal desires and his duties as President are already blurring, and we aren’t confident they can be unblurred anytime soon.
Overall, we aren’t alone when we say we think a Bitcoin or cryptocurrency reserve is a bad idea. Yes, it might be a good move for the cryptocurrency industry as a whole, but it definitely isn’t the right choice for the US government, especially not now in its current financial status. We would rather the US government sell its BTC holdings as the German government did in 2024.
