US creates "Strategic Bitcoin Reserve" as President Donald Trump doubles down on his support for cryptocurrencies

The creation of a "Strategic Bitcoin Reserve" in the United States is further proof of President Donald Trump's support for the cryptocurrency sector.

President Donald Trump's administration is creating a “Strategic Bitcoin Reserve” that will be funded by around 200,000 bitcoins seized by the United States in civil and criminal cases.

The move comes after Trump earlier this month signed an executive order setting up the reserve, which White House crypto chief David Sacks has likened to “a digital Fort Knox”.

Sacks was comparing it to the stockpiling of gold bars by the US military in the famous base, which has been mined in the dead of night and arrived in a heavily guarded convoy.

Gold is held in reserves by countries around the world as the metal is seen as a safe-haven asset, helping to protect against financial instability such as high inflation.

The metal on Friday also surpassed $3,000 per ounce for the first time, pushed by an uncertain economic outlook amid Trump's tariffs.

Gold reserves can also help to stabilise a country's currency, while the bars are used as collateral for loans and transactions.

- How will US bitcoin reserve work? -

The reserve is to be funded by bitcoin that has been seized in the United States as a result of civil and criminal cases.

Around 200,000 bitcoins will go towards setting up the reserve, which will be valued at around $17 billion in total.

The reserve will be virtually secured for an indefinite time.

Additional bitcoin can be added to the reserve as long as such action is “budget-neutral”, thus not costing the taxpayer.

- Announcement fails to impress -

The price of bitcoin initially slid after Trump signed the executive order but has since stabilised.

Analysts have blamed the lack of support on a failure to immediately announce plans to buy more bitcoin.

Dessislava Aubert, an analyst at crypto data provider Kaiko, told AFP that “legally” the US government must return bitcoin to all victims identified as suffering from a hack.

According to Aubert, “a big chunk” of the bitcoin held by the United States -- estimated at around 198,000 tokens -- would have to be returned to victims of a hack at crypto exchange Bitfinex in