Last night, President Trump signed the much-awaited Executive Order that establishes a Bitcoin Strategic Reserve and a Digital Assets Stockpile in the United States.
BTC tumbled about 5% immediately following the announcement before partially recouping most of the losses, reflecting short-term expectations that the U.S. government will not be immediately committing to acquiring crypto assets in the open market.
From a long-term perspective, however, this Executive Order represents a watershed moment for the industry.
The order entails two critical components:
First, as its title says, it establishes a Bitcoin Strategic Reserve and a Digital Assets Stockpile. As most already know by now, the distinction is important because a strategic reserve can entail further purchases by the government, while a stockpile means that the government will not sell seized assets.
The Bitcoin strategic reserve will be seeded with BTC owned by the “Treasury that was forfeited as part of criminal or civil asset forfeiture proceedings.” Each agency must review its authority to transfer government-held Bitcoin to the Strategic Bitcoin Reserve and report findings to the Treasury Secretary within 30 days.
According to Arkham Intelligence, U.S. government wallets hold about 198k BTC, worth about $17.5 billion at current prices, but potentially only part of it will be used to feed the reserve because there are assets confiscated from exchange hacks that might be restored to their original owners.
Second, the order directs Treasury and Commerce to develop budget-neutral strategies for acquiring more BTC and requires the Treasury to deliver an evaluation of legal and investment considerations for the Strategic Bitcoin Reserve within 60 days.
The fact sheet makes it clear that the government will not acquire additional assets for the U.S. Digital Asset Stockpile beyond those obtained through forfeiture proceedings.
The industry reaction to the order is almost universally positive, and we see three reasons for that.
- It clearly establishes BTC as an asset in a separate category while still acknowledging the value of other digital assets. This is a point most of the industry coalesced around after President Trump’s social media post over the weekend suggesting that the strategic reserve would include other non-BTC assets.
Note that Trump’s committed to establishing a stockpile, not a reserve, during the campaign trail. The Executive Order thus fulfills his promise. - It opens room for Congress to craft legislation on additional BTC purchases. One potential concern about the U.S. government acquiring additional BTC only through Executive Order is that it would lack the permanence that an initiative through Congress could bring.
Next Tuesday (March 11), Wyoming Senator Cynthia Lummis and the Bitcoin Policy Institute will host Bitcoin for America to foster dialogue to inform both executive and legislative action.
- The condition of revenue neutrality shields the strategic reserve initiative from potential general backlash regarding taxpayer money usage. Expect from here on the market to focus on those ways to acquire BTC without impacting the budget. Some alternatives include diversifying the U.S. gold reserves into BTC and utilizing the Exchange Stabilization Fund (ESF).
This is a monumental milestone for the industry. Not only does it give the stamp of approval from the U.S. Government on BTC and the asset class more broadly, but it could also incentivize more countries to do the same.
Benjamin Graham said, "in the short run, the market is a voting machine but in the long run, it is a weighing machine.”
Although we understand the muted short-term market reaction, as some were positioned for immediate additional government purchases, yesterday’s well-crafted executive order should be an encouraging signal for the new regulatory environment that is now surrounding BTC and the broader crypto ecosystem.
