The Strategic Bitcoin Reserve Is Here to Stay.

Following last week's executive order creating a Strategic Bitcoin Reserve (SBR), policymakers are directed to explore creative strategies to accumulate bitcoin without increasing the federal budget

The U.S. is making a move into bitcoin. As part of President Trump’s recent executive order, policymakers are directed to explore creative strategies for accumulating bitcoin without increasing the federal budget or burdening taxpayers.

This is a crucial step as we navigate the evolving landscape of digital assets. The administration is tasked with identifying ways to build a Strategic Bitcoin Reserve (SBR) through accounting methods rather than direct market purchases.

The executive order directs the U.S. Treasury to identify several possibilities for accumulating bitcoin without spending new money. There is precedence for this approach. In the past, Treasury has accumulated gold reserves through mechanisms such as mandatory exchange policies or accepting gold as payment for taxes and tariffs. This allowed the government to build significant reserves without explicit deficit financing, as the gold came from internal circulation or external trade rather than borrowing or direct expenditure.

Lawmakers and advisors have floated a variety of approaches for building up a bitcoin trove in a budget-neutral way. Some of these paths seem more immediate, such as simply holding seized coins. Others would require a serious overhaul of existing laws. For each method, the unifying theme is avoiding an open-market buy. Instead, the government would gather or swap its way to a robust reserve.

Holding Seized Bitcoin

A surprising amount of bitcoin already sits in federal hands. Over many years, law enforcement agencies have seized large quantities from illicit actors, today estimated by researchers at about 200,000 coins.

Traditionally, the government auctioned these coins off and returned the proceeds to the general fund. But President Trump’s recent executive order flipped that approach, instructing agencies to deposit forfeited bitcoin directly into the U.S. Treasury instead of selling it.

This decision appears to stem in part from advice by cryptocurrency researchers and economists, who have argued that selling seized bitcoin is economically wasteful and ultimately pointless. Since bitcoin is a scarce asset with limited supply, selling it simply shifts the coins to someone else, who will likely hold them long-term anyway.

In contrast, holding onto seized bitcoin would gradually increase the government’s relative share of the total supply as new coins are mined. This strategy is also consistent with the administration’s goal of reducing the federal deficit and keeping the budget in mind.

The move to hold rather than sell seized bitcoin was a key part of the Trump administration’s plans for cryptocurrency, and it has already had a significant impact on the market. As the administration continues to develop its strategy for digital assets, it will be interesting to see what other steps it takes and how they affect the future of cryptocurrency.

The suggestion to use seized bitcoin for a strategic reserve was initially floated by cryptocurrency researchers and economists in 2018, following a report by the Treasury Inspector General for Tax Administration. The report criticized the IRS for failing to properly value and report the bitcoin it had seized, and it recommended that the agency begin holding onto seized bitcoin in order to build up a government reserve.

The administration's decision to heed this advice is a testament to the fact that even the smallest acts of persistence can sometimes lead to large-scale change. By refusing to sell seized bitcoin and instead placing it in a strategic reserve, the administration is not only acting in the best interests of the American people but also setting an example for other nations to follow.

The administration’s move to hold rather than sell seized bitcoin is a surprising but welcome development. It is a small step, but it could have a big impact.

Senator Lummis Suggests Swapping Gold For Bitcoin

Another proposal comes from Senator Cynthia Lummis (R-WY), a vocal bitcoin supporter in Congress. According to a report by The New York Times, Lummis has suggested that the Treasury could swap a portion of its gold reserves for bitcoin.

The U.S. remains one of the largest gold holders on the planet, with roughly 8,100 tons in vaults, according to World Gold Council data. If even a fraction of that was sold off and converted into bitcoin, the result could be a million-coin cache—around 5% of all bitcoin that will ever exist.

Surprisingly, by using some creative yet perfectly legal accounting maneuvers, gold could be swapped for bitcoin without affecting the “book value” of gold held on Treasury’s books. This is because the gold holdings are denominated in dollars, not ounces, and the valuation used by Treasury is only $42.2222 per ounce, giving it a nominal value of about $11 billion. This number was set in 1973 and never updated.

This means that if Treasury would simply revalue its gold at prices closer to today’s price of about $2900 per ounce, it would increase in value significantly more than the bitcoin it could buy with that gold. For example, if Treasury sold one-eighth of its gold to buy bitcoin at today’s prices, it would decrease its gold holdings by about $1.3 billion