White House Announces Strategic Reserve of Bitcoin and Other Digital Assets

The White House has announced a strategic reserve of bitcoin and other digital assets, with President Trump authorizing a US digital asset stockpile consisting of digital assets other than bitcoin forfeited in criminal or civil proceedings. The move is seen as a major win for the cryptocurrency industry, which hopes to gain stability and clarity from a GOP-led Washington.

Key Points:

• The reserve will include bitcoin as well as other digital assets such as ethereum (ETH), XRP (XRP), solana (SOL), and cardano (ADA).
• The government will not acquire additional assets for the stockpile beyond those obtained through forfeiture proceedings.
• Treasury Secretary Scott Bessent told CNBC that seized crypto assets would go into the reserve first, and then the way forward is to be determined for more acquisitions for the reserve.
• Senator Cynthia Lummis (R-WY) has discussed a US government crypto-buying program that would call for the Federal Reserve to purchase more bitcoin using 1970s-era certificates for gold reserves.

Industry Reaction:

• The crypto world hopes that with the White House's support, it will get even more of what it wants from a GOP-led Washington, providing some stability to a market trying to regain the upward momentum.
• Coinbase's Armstrong said in an interview last Friday that "the goal of a strategic reserve is to buy or convert current assets into bitcoin and then hold them...that way, we can remove the short-term volatility from the equation and look at this as a long-term strategic asset."
• Proponents have argued strategically buying and holding bitcoin could one day help the government pay down its debt.

Regulatory Clarity:

• The SEC has dropped several high-profile cases against prominent cryptocurrency companies since Trump took office.
• A presidential working group on digital assets is studying the possibility of moving legislation through Congress that could provide more clarity about regulatory oversight of digital assets.
• Trump emphasized support for Congress to pass legislation on stablecoins and the broader crypto market, saying "This is a tremendous opportunity for economic growth and innovation in our financial sector."

Market Impact:

• Bitcoin fell sharply from above $90,000 in the hour after Thursday's presidential action before regaining much of that ground.
• Bitcoin is down 4% since the order was announced and 20% from its all-time high above $109,000 on the day of Trump's inauguration in January.

What's Next:

• The Office of the Comptroller of the Currency (OCC) has offered some clarification on a range of crypto activities it permits banks to do including crypto asset custody and certain stablecoin activities.
• An executive order like the one signed by Trump can be reversed by future presidents, making permanent legislation a priority for proponents of the reserve.