Author: David Yaffe-Bellany; Translator: Liam, Carbon Chain Value
The cryptocurrency industry has urged President-elect Trump to establish a Bitcoin reserve, creating real political momentum for the plan.
According to the New York Times, a 50-page policy proposal has detailed the Bitcoin reserve plan. The specific details have been discussed with President-elect Donald Trump and his advisers. And discussed with cabinet nominees how to pay for it.
On the eve of Trump's inauguration, the cryptocurrency industry is urging his new administration to implement a bold plan that seemed unimaginable a year ago: "A government plan to buy and hold billions of dollars in Bitcoin."
Last summer, during his campaign, Trump vowed to establish a federal "Bitcoin reserve" as a "permanent national asset for the benefit of all Americans." Bitcoin enthusiasts have hailed the idea as transformative, claiming it would help reduce the national debt. It’s still possible that Trump could abandon the plan, whose details are still being debated. But weeks of lobbying by industry executives to develop the proposal have raised hopes that Trump will take action soon after taking office.
In recent days, cryptocurrency executives have advised David Sacks, a venture capitalist appointed by Trump to oversee cryptocurrencies and artificial intelligence, on an executive order that could cover multiple areas of cryptocurrency policy, according to three people familiar with the matter. Two of them said the bitcoin reserve was part of those discussions.
“This could be a first-day initiative,” said Pete Rizzo, editor of crypto industry news outlet Bitcoin Magazine. “It’s certainly an idea that’s going to go a long way in a short period of time.”
The U.S. has seized as much as $19 billion worth of bitcoin from criminals, according to some estimates, and the government recently decided to sell off the stolen goods. Some cryptocurrency executives have called on Mr. Trump to continue holding onto those bitcoins, which he is likely to do through executive order. Others have floated a more ambitious plan in which the government would buy tens of billions of dollars of new bitcoins to create a “strategic reserve” similar to federal gold and oil reserves. Such spending would likely require congressional approval.
Advocates of the plan argue that profits from the bitcoin reserve would help reduce the $36 trillion national debt and ensure the U.S. economy retains its dominance if a global economy one day runs on cryptocurrencies.
But the most obvious beneficiaries would be those who already own bitcoins, which surged to an all-time high of $100,000 last month. If the government plans to buy bitcoins, it is likely to continue to push up prices. In September, Mr. Trump launched his own cryptocurrency venture, World Liberty Financial.
Some cryptocurrency executives have privately said they worry the plan could make the industry look greedy, and many financial experts have dismissed it as a self-serving stunt, noting that bitcoin’s price has fluctuated wildly over the years.
“There is no strategic or rational reason for this idea,” said Eswar Prasad, an economist at Cornell University. “It is undoubtedly good for current Bitcoin holders, but it is also undoubtedly bad for taxpayers.”
But the mere fact of considering a reserve of Bitcoin shows how the political winds have changed dramatically after a years-long regulatory crackdown on the crypto industry.
Brad Garlinghouse, chief executive of cryptocurrency company Ripple, said in an interview that he encouraged the president-elect and his advisers to establish a federal reserve program that includes Bitcoin and other cryptocurrencies, including XRP, which is closely related to Ripple’s business, during a recent dinner with Mr. Trump at his private estate, Mar-a-Lago.
"He's really concerned about fulfilling his aspirations as the crypto president," Garlinghouse said.
Two new 50-page policy proposals released by a bitcoin advocacy group have been circulated among industry executives and Trump allies. In recent weeks, Sen. Cynthia Lummis, R-Wyo., has discussed with the Trump transition team, including Cabinet nominees, a plan to buy 1 million bitcoins over five years, according to two people familiar with the matter.
Brian Hughes, a spokesman for the Trump transition team, was asked for comment and said the president-elect "will fulfill his promise to encourage American leadership in cryptocurrency and other emerging technologies."
For years, bitcoin enthusiasts have speculated whether the U.S. government would stockpile bitcoins, digital gold reserves that would match its actual gold holdings. Federal authorities have seized about 200,000 bitcoins in criminal activity, including billions of dollars worth of cryptocurrency seized from hackers of the online drug market Silk Road.
But it wasn’t until Trump’s embrace of cryptocurrency during his campaign that people believed the U.S. might hold those bitcoins permanently or buy more on the open market. Trump previously dismissed bitcoin as a “scam” in 2021.
In July, shortly before Mr. Trump was scheduled to speak at a popular bitcoin conference in Nashville, he met privately with a group of cryptocurrency executives and floated the idea of a reserve bitcoin. Nathan McCauley attended the gathering and runs Anchorage Digital, which provides storage services for digital currencies. At the conference, Senator Lummis unveiled a bill, the Bitcoin Act, calling for the U.S. to buy 1 million bitcoins over five years.
Mr. Trump did not explicitly call for the government to buy more bitcoin in his speech. But he pledged to convert the nation’s existing bitcoin reserves into the “core” of a “national bitcoin reserve,” praising the cryptocurrency as a “technological marvel.” He seemed to reiterate that promise in an interview at the New York Stock Exchange last month when asked if he would build a cryptocurrency reserve. “Yes, I think so,” he replied.
The most vocal advocate of this view in the industry is David Bailey, CEO of Bitcoin Magazine and organizer of the Nashville conference. Mr. Bailey claims credit for helping to shape Mr. Trump’s thinking on bitcoin and said they met last year before the conference. More recently, Mr. Bailey has also served as a liaison between cryptocurrency executives and people in Mr. Trump’s circle, two executives familiar with the matter said. Mr. Bailey declined to comment.
Mr. Trump’s comments in Nashville instantly turned a somewhat bizarre-sounding proposal into one of the industry’s most important policy goals. Michael Saylor, executive chairman of MicroStrategy, which owns more than $4 billion in bitcoin, once compared the creation of a bitcoin reserve to the Louisiana Purchase. Saylor, a friend of Trump’s son Eric, said at an industry conference in November: “Bitcoin is America’s destiny.” Recently, cryptocurrency companies have stepped up their publicity to try to profit from bitcoin reserve plans, no matter what form the plan takes. Last month, Anchorage Digital released a white paper on how to build a bitcoin reserve and plans to bid for a contract to protect the government’s cryptocurrency assets, which may eventually be overseen by the Treasury Department.
“There’s a new group of people in the Treasury Department who are likely to take on this responsibility, so they need to be educated,” Mr. McCauley said in an interview. “We’re actively involved.”
Lobbying at the state level has also intensified, with well-funded cryptocurrency industry groups often able to successfully influence the formulation of laws and regulations. Lawmakers in Texas, Ohio, Pennsylvania, New Hampshire, North Dakota and Oklahoma have introduced bills to establish state-controlled cryptocurrency reserves. Some of the language in those proposals is similar to a model bill released by the Satoshi Action Fund, a Bitcoin nonprofit foundation.
The group’s chief executive, Dennis Porter, said in an interview that he has been working with state lawmakers across the country to promote Bitcoin reserves. He said lawmakers in several other states are drafting legislation to establish their own Bitcoin reserves.
“The draft is in our inbox,” Porter said.