US creates a “Strategic Bitcoin Reserve†by David Sacks

The creation of a “Strategic Bitcoin Reserve†in the United States is further proof of President Donald Trump's support for the cryptocurrency sector.

President Donald Trump has signed an executive order to create a “Strategic Bitcoin Reserve” in the United States, a move that underscores his administration's support for the cryptocurrency sector.

Earlier this month, Trump penned the order establishing the reserve, which White House crypto chief David Sacks has likened to “a digital Fort Knox.”

The initiative will see the US government storing a portion of its wealth in the form of bitcoin, similar to how countries hold gold reserves.

Gold is typically seen as a safe-haven asset, offering protection against financial instability such as high inflation. It is also used to help stabilise a country's currency, while bars of the metal can be used as collateral for loans and transactions.

On Friday, gold prices surpassed $3,000 per ounce for the first time, driven by an uncertain economic outlook amid Trump's tariffs.

The bitcoin reserve will be funded by about 200,000 bitcoins, worth around $17 billion in total, that have been seized in the US as a result of civil and criminal cases.

The reserve will be virtually secured for an indefinite time, with additional bitcoin being added to the reserve as long as such action is "budget-neutral," meaning it will not cost the taxpayer.

Announcing the move earlier this month, Trump said: "We will be creating a Strategic Bitcoin Reserve to serve as a national asset, harnessing the technological innovation of cryptocurrency for the economic prosperity of our people."

The initiative will see the US government storing a portion of its wealth in the form of bitcoin, similar to how countries hold gold reserves.

The price of bitcoin initially slid after Trump signed the executive order but has since stabilised.

Analysts have blamed the lack of support on a failure to immediately buy more bitcoin.

Dessislava Aubert, an analyst at crypto data provider Kaiko, noted that "legally" the US government must return bitcoin to all victims identified as suffering from a hack.

According to Aubert, "a big chunk" of the bitcoin held by the US - estimated at around 198,000 tokens - would have to be returned to victims of a hack at crypto exchange Bitfinex in 2016.

Sector watchers are also waiting to see if other digital tokens will be added to the reserve, which is possible according to the executive order.

Trump has said that bitcoin's nearest rival, ether, along with three other tokens - XRP, Solana and Cardano - could be included.

The president's comments come after he met with executives from major crypto firms, including Binance and Circle, to discuss the potential for a US bitcoin reserve.

Critics of the US bitcoin reserve point out that, unlike gold, cryptocurrencies are risky assets and have no intrinsic value.

However, Sacks believes that by storing bitcoin over time, the government would protect itself from the cryptocurrency's massive short-term volatility.

Meanwhile, Stephane Ifrah, an investment director at crypto platform Coinhouse, said that bitcoin, like gold, can profit from its rarity thanks to a limited 21 million tokens.

An advantage of the bitcoin reserve is its transparency, since the level of tokens will be known at all times - unlike the amount of gold placed in Fort Knox.

Additionally, with the bitcoin reserve, "we're dealing with a rare asset that's much more suited to today's world," Ifrah told AFP.

Prominent cryptocurrency critic Molly White believes the "true reason" for the reserve "is a way to drive interest in the crypto industry," which could financially benefit investors.

Trump has been accused by some of showing a conflict of interest, having vowed ahead of being elected to make the US the "bitcoin and cryptocurrency capital of the world."

The Financial Times reported that Trump earned $350 million from launching a meme coin, $TRUMP, to coincide with his inauguration.

The Wall Street Journal has reported that the Trump family discussed acquiring a possible stake in the Binance platform - a report denied by the crypto exchange's founder.

Brazil is also considering the creation of a cryptocurrency reserve, an idea recently ruled out by the Swiss central bank.

Governments around the world are partaking in cryptocurrency activity, notably by selling digital assets seized in court cases, as was the case in Germany last year with 50,000 bitcoins.

El Salvador made bitcoin one of its official currencies, reversing the decision this year owing to a lack of take-up by citizens.

Bhutan holds nearly $900 million worth of bitcoin, equivalent to nearly 30 percent of the kingdom's gross domestic product.output: