Bitcoin Act Proposal Could Establish Bitcoin as U.S. Reserve Asset

With Donald Trump's election to the presidency, big changes are predicted in the Bitcoin and crypto spaces.

As Donald Trump cements his presidency, Bitcoin and the crypto space are poised to see some big changes. The administration is expected to make moves that will favor Bitcoin, boosting its value, adoption, and role as a strategic reserve asset.

Key legislation like the Bitcoin Act could help to solidify Bitcoin's place in the U.S. economy, sparking further institutional and government demand.

Cynthia Lummis' #Bitcoin Act Pledges to HODL What They Have Now

It Pledges to BUY 200,000 $BTC Per Year for Five Years Capping Purchases at 1,000,000 $BTC

That's Almost 5% of the Total #Bitcoin Supply

FKING HUGE!!!

Source in Comments. pic.twitter.com/EIuoYNiypJ

Bitcoin Act Proposal To Make Bitcoin A U.S. Reserve Asset

Under Trump's guidance, a major legislative initiative that could see the expression is the Bitcoin Act, aiming to designate Bitcoin as a strategic reserve asset. This would see the U.S. government buying up to 5% of the total Bitcoin supply, giving the flagship metal a role in national reserves akin to that of gold.

In doing so, the United States would be defining Bitcoin as an integral and valued part of its financial portfolio, signaling to global markets that Bitcoin is more than just a speculative asset class.

This initiative could also spark a new wave of institutional interest, given that the administration's backing would likely instill confidence in the private sector.

“This policy action could be redefining Bitcoin in financial space,” noted a senior analyst at Coin Shares.

Trump's SEC Reform Plans Could Ease Crypto Regulations

Another avenue of possible influence for Bitcoin is Trump's approach to the regulatory landscape. In particular, his administration has regularly taken issue with the way that the Securities and Exchange Commission (SEC) is handling digital assets under current leadership.

Trump's team is looking to create a more favorable regulatory climate for digital assets by bringing in new SEC commissioners who are more receptive to crypto, allowing Bitcoin and other cryptocurrencies to operate with greater freedom.

Trump's expected actions at the SEC also come amid significant crypto-related campaign donations, with well-known industry players like Coinbase and Ripple, as well as crypto-specific superPACs, being listed among the top fundraisers in this election cycle.

These organizations are expected to be pushing for legislative changes in Congress that will favor Bitcoin and other cryptocurrencies.

Under Trump, Economic Policy Could Favor Value And Demand For Bitcoin

Speaking of the value and demand for Bitcoin, Trump has openly stated that he wants Elon Musk to help reduce the national debt and government spending.

Set to head a proposed “Department Of Government Efficiency (D.O.G.E.)” that will oversee cutting $2 trillion from federal outlays, Musk has previously stated that while this goal will cause “temporary hardship,” it is necessary for “long-term prosperity.”

This partnership puts a spotlight on Trump's focus on fiscal reform—namely, cutting spending in the pursuit of efficiency. Combining this budgetary constraint with a loosening of monetary policy could increase liquidity without adding to government debt—a mix that has historically been favorable to assets like Bitcoin.

Supportive Policies Could Be Propelling Bitcoin Towards Mainstream Institutional Adoption

Having attracted investors seeking alternatives to traditional economic assets, Bitcoin has served as a hedge against currency devaluation during periods of financial exuberance. Under these conditions, Bitcoin could attract a wider attention from investors looking to preserve their capital amidst economic uncertainty.

Beyond legislation and economic policy, Trump's administration could also help to shape the public and institutional narrative around Bitcoin. The perception of Bitcoin is evolving from a volatile, niche investment toward a mainstream financial instrument, as more prominent figures come out in support of the asset.

Despite record Bitcoin inflows this year, broader institutional adoption is still relatively nascent. Supportive policies from the Trump administration could see financial institutions begin treating Bitcoin as a standard portfolio component, accelerating its acceptance within the financial industry and boosting demand.

Recommended for you: