The US May Soon Have a Strategic Bitcoin Reserve BTC/USD

The expectations of a U.S. strategic Bitcoin BTC/USD reserve have skyrocketed following Donald Trump's presidential victory, with the cryptocurrency sector firmly behind the ambitious idea.

Cryptocurrency traders are buzzing with excitement over the prospect of a U.S. strategic Bitcoin reserve, an idea that has gained traction following Donald Trump's presidential victory. The cryptocurrency sector is strongly mendukung the concept.

Trump himself called for a national Bitcoin stockpile at a conference earlier this year. He also advocated against selling any state-owned Bitcoin stash.

While nothing concrete has emerged from Trump since his advocacy, his Republican colleagues, notably Sen. Cynthia Lummis (R-Wy.), have proposed legislation, dubbed the BITCOIN Act, to purchase one million Bitcoins over five years.

People in the digital assets industry are largely welcoming the notion.

The Case For And Against

"The move could position the U.S. as a leader in crypto," Joe McCann, founder and CEO of cryptocurrency hedge fund Asymmetric, told Benzinga.

If the reserve gains more steam and comes closer to materializing, McCann said it is likely to spur Bitcoin's price action significantly.

"The market is already somewhat anticipating the potential impact, but I don't think a lot of people have 'priced in' the idea that if this were to actually pass [BITCOIN Act], other countries would also want to acquire a percentage of the total Bitcoin supply for their reserves, driving even more demand."

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However, critics such as Peter Schiff have slammed the idea, predicting that it will lead to the dollar's devaluation and hyperinflation, as the government will need to print more money to buy more Bitcoin.

In response, Lummis has maintained that the government will not need to spend "any new dollars" to fund the purchases. Instead, it could use the gold certificates, currently valued at 1970s prices, held by the Federal Reserve, update them to the fair market value and then sell them to buy Bitcoin.

Are Your Bitcoin Holdings At Risk?

Another less-discussed aspect of a potential reserve is whether it will give the federal government supreme authority over Bitcoin holdings, considering the limited supply of the asset. And whether, in an emergency situation, the government will enact something similar to Franklin D. Roosevelt’s Executive Order 6102 of 1933, which forced Americans to surrender a large portion of their gold holdings to the Federal Reserve.

"Bitcoin is an entirely different animal from gold. It is not tied to our monetary system like gold was in 1930," Neil Bergquist, CEO of Seattle-headquartered cryptocurrency exchange Coinme, told Benzinga.

"Seizing an individual’s Bitcoin would be a logistically and legally complex operation since it is on a decentralized blockchain, and such confiscation actions would likely be determined illegal," he argued.

Denis Sklyarov, CEO and co-founder of decentralized physical infrastructure company WiFi Map, also agreed with the view that Bitcoin's digital, decentralized nature will make such an endeavor difficult.

"Additionally, legal and cultural shifts in the U.S. over the past century emphasize financial freedom and personal property rights, making such a sweeping confiscation almost impossible under current laws," he added.

McCann took a middle ground, suggesting that the government may encourage people to sell Bitcoin voluntarily rather than forcing them to surrender it.

"If the U.S. were to establish a strategic Bitcoin Reserve, it might use tax breaks or premium buy-back programs as carrots instead of sticks," he noted.

Bettors on the popular prediction market platform Polymarket priced in a 29% chance of Trump creating a Bitcoin reserve in the first 100 days of his presidency at the last check.

Price Action: At the time of writing, Bitcoin was trading at $96,474.28, down 0.29% in the last 24 hours, according to data from Benzinga Pro.