Donald Trump has signed an executive order to create a Strategic Bitcoin Reserve and a Digital Asset Stockpile, which will include cryptocurrencies forfeited to the government.
The reserve will start with approximately 200,000 bitcoins already owned by the US government. These were not bought but rather they were forfeited to the US government as part of criminal or civil cases.
Those 200,000 bitcoin are worth about $17.5 billion today and I can only wish it were Zimbabwe with that kind of stockpile. It’s peanuts for the US but would be a game changer for Zim.
Anyway, the crypto reserve is a fulfilment of a campaign promise Trump made and aims to stabilize the cryptocurrency market. Crypto bros contributed millions upon millions to both Trump and Kamala’s campaigns and these are the fruits, I guess.
Following the announcement, Bitcoin prices fell by over 5% because the announcement also implied that the US government would not be buying crypto. Instead, it will just hold on to the crypto it seizes.
That lack of active buying and transparency in the US government’s crypto strategy is why the price fell despite the supposed good news that the US was creating a crypto reserve.
A White House crypto summit is scheduled for today, featuring industry leaders like Coinbase CEO Brian Armstrong and Chainlink Labs CEO Sergey Nazarov, where Trump is expected to deliver remarks. More details about the reserve are expected to be revealed there.
It shouldn’t be long till we get more clarity on what the Strategic Bitcoin Reserve means for the crypto market as a whole. It could have an impact on some other crypto assets as Trump has said he would like to see those included in the reserve.
For now, the uncertainty surrounding the government’s intentions—whether it will simply hold or eventually sell its holdings—means prices may be volatile. That’s compounded by the fact that this could all be done by the parliament (congress) in the US.
Regardless, the fact that crypto is now being discussed at these high levels means its legitimacy may be growing. Whether that turns out to be a blessing or a curse for the industry remains to be seen.
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