Fulfilling a campaign promise, US President Trump issued an Executive Order establishing a US strategic reserve of bitcoin as well as a digital asset stockpile. The reserve was originally touted as including non-bitcoin cryptocurrencies, but in the final order, the initial reserve is to be made up only of previously seized or forfeited bitcoin held by the Federal Government with a second stockpile to hold non-bitcoin cryptocurrency held by the government from seizures or forfeitures.
The bitcoin reserve is not to be sold and the Secretaries of Treasury and Commerce have been authorized to
develop budget-neutral strategies for acquiring additional bitcoin, provided that those strategies impose no incremental costs on American taxpayers.
The digital asset stockpile is not subject to a similar direction, and is only to grow from seizure of digital assets. David Sacks, the Trump Crypto Czar said that US government sales of seized digital assets to date has yielded $366M, but had those assets not been sold, they would have been worth $17B on current prices (or slightly less as the price of bitcoin fell after the announcement, potentially due to hopes the US government would engage in ongoing purchases of bitcoin for the reserve). In January, prior to the changeover in administration, the Department of Justice had been cleared to sell US$6.5B in bitcoin but that will now form part of the strategic reserve.
The Executive Order also covers off an accounting of all cryptocurrency held by the US government with a view to bringing these assets into one place. The further development of crypto-expertise in the US government and the formal establishment of a reserve are further crypto-positive signs from the present administration.
Meanwhile, pro-crypto Senator Cynthia Lummis has not given hope that the US government will look to scale its Bitcoin reserves in future after she re-introduced her Bitcoin Act into the Senate which the sponsors say will codify the Trump plan. The Act would see the US Government divert remittances to the Federal Reserve to purchase up to 1 million Bitcoin over five years. A number of US states are also exploring creating their own reserves.
The United States is not the only country which holds significant investments or a stockpile of crypto-assets. Governments globally are increasingly interacting with crypto-assets as an investment or strategic asset or due to law enforcement seizures. A range of policy approaches are evident to date, however, Australia seems unlikely to follow the Trump administration's move any time soon.
By Michael Bacina and Steven Pettigrove
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