Trump Announces Plans To Establish A 'Crypto Strategic Reserve' Featuring Bitcoin And Ethereum

On Sunday, President Donald Trump announced that the U.S. plans to establish a “crypto strategic reserve” that will feature prominent cryptocurrencies such as bitcoin and ethereum

President Donald Trump announced on Sunday that the U.S. plans to create a “crypto strategic reserve,” which will include major cryptocurrencies like bitcoin and ethereum, leading to a surge in crypto prices.

This move marks Trump’s latest initiative in engaging with the cryptocurrency sector, which he has increasingly positioned himself as a key supporter of in recent months ahead of the November election.

Key Facts

Trump said that a national crypto reserve would help “elevate this critical industry after years of corrupt attacks,” and that he has instructed his administration to “proceed with the Crypto Strategic Reserve,” which will feature prominent cryptocurrencies such as XRP, Solana, and ADA.

In a follow-up post, Trump stated that the reserve will “obviously” have bitcoin and ether as the “heart of the Reserve,” showcasing his enthusiasm for the two leading cryptocurrencies.

This announcement follows an executive order from Trump on January 23, directing his administration to form a “working group” to propose a regulatory framework for digital assets, including the possibility of a “national digital asset stockpile.”

What Was The Impact On Crypto Prices?

Following Trump’s announcement, bitcoin surged over 10%, increasing from around $94,000 to more than $94,000 early Sunday afternoon. Meanwhile, ethereum experienced a 13% rise, briefly surpassing $2,500 earlier in the afternoon.

Smaller market cap coins that Trump mentioned—like XRP, ADA, and Solana—also saw their prices soar by at least 20% shortly after the announcement.

What Would A ‘Crypto Strategic Reserve’ Look Like?

The specifics of the proposed crypto stockpile are still unclear, but Trump’s executive order suggests that the reserve could be “potentially derived” from cryptocurrency seized by federal authorities “through law enforcement efforts.”

The New York Times reports that the federal government currently holds an estimated $19 billion in seized bitcoin, which could be used to form the reserve.

The Washington Post adds that the government has previously sold off its crypto assets, which can lead to a decline in crypto prices. However, keeping this cryptocurrency in a stockpile would help prevent such price drops. It remains to be seen whether Trump would seek to acquire significant amounts of new cryptocurrency to expand the reserves, which could further stimulate the crypto market and benefit existing holders, but would likely require congressional approval, as the Times notes.

Chief Critic

While the cryptocurrency community has expressed support for the idea of a national crypto stockpile, some economists have voiced concerns about the initiative. They argue that the government’s involvement in cryptocurrency could be a risky move, primarily benefiting current crypto holders and risking the loss of billions in taxpayer money should the market value decrease.

“There’s just no discernible logic to do it,” said Mark Zandi, chief economist at Moody’s Analytics, in a November statement about a national crypto stockpile. “I understand why crypto investors would be in favor of it. But other than that, I don’t see the value-added, especially if the taxpayers are going to be on the hook for the cost.”

Why Do Crypto Advocates Want A Stockpile?

Cryptocurrency supporters highlight that a national stockpile would benefit the industry by enabling the government to make regular purchases of crypto and reducing the impact of government sell-offs, which are known to influence market prices. They believe it could also contribute to reducing the national debt, as the federal government’s revenue would increase with the rising value of its crypto investments.

In July, Sen. Cynthia Loomis, R-Wyo., introduced legislation to establish a national bitcoin stockpile, presenting cryptocurrency as a government “savings technology” and a means to “improve America’s balance sheet,” which she stated would "go a long way to help us begin paying down the national debt."

Tangent

One cryptocurrency not mentioned in Trump’s announcement is tether, a stablecoin that is pegged to the U.S. dollar. However, the Post reports that the seized cryptocurrencies available for a stockpile may include this stablecoin.

This is relevant because Trump’s Commerce Secretary Howard Lutnick has ties to tether. Reports indicate that Cantor Fitzgerald, which Lutnick previously headed, is involved in managing tether’s portfolio and has recently secured a deal that could grant it a 5% ownership stake in tether.

Although Lutnick has stepped down from his role at Cantor Fitzgerald and is in the process of divesting from it due to his government position, his connection to tether has drawn scrutiny, with Sen. Elizabeth Warren, D-Mass., raising “serious concerns” about the implication of his involvement for policies regarding tether and broader cryptocurrency sector. The White House and Commerce Department did not immediately respond to requests for comment on Lutnick’s role in the Crypto Strategic Reserve.

Key Background

Trump has become a notable voice in the crypto sphere ahead of the November election, enlisting the fundraising support of prominent figures in the industry. He has introduced a series of proposals that would benefit