The 2025 Bitcoin Act adds new provisions for coordinating Bitcoin purchases with the ESF. What is the ESF?

The 2025 version of the Bitcoin Act has added new Bitcoin purchase terms to coordinate with the ESF, which has attracted widespread attention. ESF, the Exchange Stabilization Fund, is the U.S. Treasury Department’s emergency reserve account. It is mainly composed of US dollar, foreign currency and special draw rights (SDR), and can play a stable role in many fields.

The creation of the ESF dates back to the Gold Reserve Act of 1934. At that time, the United States broke away from the gold standard and the US dollar depreciated. In order to stabilize the international currency market, the fund came into being. It was initially funded by $2 billion of the $2.8 billion gold surplus obtained by the government’s depreciation of the dollar and started operations.

From a functional perspective, ESF can help the US Treasury Department intervene in the foreign exchange market. Because the global currency market is closely related and a certain currency fluctuates easily, the ESF can calm the turmoil. Without Congress’ approval, the Treasury Department can use it to interfere with the exchange rate and maintain the stability of domestic and foreign currencies.

Among them, the SDR is an important feature of ESF. Founded by the International Monetary Fund (IMF) in 1969, it is an international monetary reserve "quasi-currency" composed of a basket of major national currencies and fully supported by the credit of member governments. This gives the U.S. Treasury avenue to coordinate with the IMF when stabilizing the exchange rate. If necessary, the Treasury Department can convert SDR funds into US dollars through the Federal Reserve, or exchange them for gold and other international reserves.

Since its inception, ESF has played a key role in crises many times. During the 1994 Mexican economic crisis, the Clinton administration wanted to invest in stabilizing the Mexican peso, but Congress opposed it. Ultimately, Treasury Secretary Robert Rubin used the ESF, a move that was controversial, helped stabilize the Mexican economy, and the United States also made $500 million in profits.

During the 2008 financial crisis, the collapse of investment bank Bear Stearns triggered a run in money market funds. The Ministry of Finance used ESF to provide guarantees for the money market mutual fund market, charge fees for participating funds, enhance investor confidence and stabilize the market.

During the COVID-19 pandemic in 2020, ESF provided initial equity for several Fed loan projects. For example, the initial funds of $454 billion were provided for "Main Street loan tools" and "municipal liquidity tools", and the Federal Reserve used this to leverage about $4 trillion in lending capabilities to help alleviate economic difficulties.

Today, in the 2025 Bitcoin Act, ESF is mentioned to coordinate Bitcoin purchases. This move has sparked a lot of speculation because the US executive may acquire Bitcoin or use the fund. After all, ESF was mainly used to stabilize the financial market in the past, but now it has entered the Bitcoin field, which may have a profound impact on the cryptocurrency market and US financial policies.

In terms of gold revaluation, the new version clearly stipulates that the proceeds from revaluation of the Federal Reserve gold are applied to the purchase of Bitcoin, while the 2024 version only includes these funds in general funds, which is a significant change. Behind this series of changes is the embodiment of the United States' exploration of new paths in the field of digital assets, and ESF's role in it is becoming increasingly critical. Its asset size is about US$39 billion, and how to reasonably allocate in Bitcoin purchase has become the focus of attention from all walks of life.

In the future, how the coordination operations between ESF and Bitcoin purchases will be carried out? Whether it will continue to advance according to the annual plan of 200,000 Bitcoins, or will there be new changes, which need to be further observed. But it is certain that ESF's role in the financial field is constantly expanding, and its participation in the Bitcoin bill will also reshape the US financial policy landscape.