Trump's establishment of formal national cryptocurrency reserves triggered selloffs

Cryptocurrency advocates are urging calm after US President Donald Trump's establishment of formal national cryptocurrency reserves triggered selloffs as investors

U.S. President Donald Trump has sparked a shift in sentiment among institutional investors and sovereign wealth funds following the establishment of a national cryptocurrency reserve, a policy that one pundit says “delivered almost nothing”.

Trump's administration announced the creation of the Strategic Bitcoin Reserve (SBR) and the U.S. Digital Asset Stockpile (DAS) at this month's inaugural White House cryptocurrency summit.

The SBR will be dedicated exclusively to Bitcoin, while the DAS will manage other cryptocurrencies such as Ether, XRP, Cardano and the troubled Solana, on which Trump's own controversial $TRUMP coin is based.

The new funds will serve as vehicles for the "orderly and strategic management" of any cryptocurrency held by all U.S. government departments, which will now have 30 days to inventory their crypto holdings and weigh the legal implications of transferring them into the SBR.

The government will not be buying additional assets for the DAS and will not sell bitcoin from the SBR, which will initially contain all Bitcoin held by the U.S. Department of the Treasury.

According to Trump's crypto czar David Sacks, the administration's agencies have seized "a significant amount of BTC" from criminal or civil asset forfeitures. However, despite this, the government has not implemented a policy to maximize BTC's strategic position as a unique store of value in the global financial system.

Each department has been left to manage forfeited crypto on its own, with many shelving the assets or selling them in a haphazard process that has already cost the government over $17 billion, the White House says.

The administration's announcement comes in response to a request from several senators to create a national Bitcoin trust to protect the U.S. dollar from manipulation by China and other nations.

"This move harnesses the power of digital assets for national prosperity, rather than letting them languish in limbo," the executive order says, promising that the new structure "will ensure proper oversight, accurate tracking, and a cohesive approach" to crypto.

Sometimes, bros get what they asked for

Trump's rhetoric about normalizing the government's approach to cryptocurrency was a regular feature of his election campaign, and the establishment of the SBR and DAS fulfills his promises to an industry that donated tens of millions in response.

The president's campaign saw him tout the promise of Bitcoin as a hedge against inflation and a tool for financial inclusion, while also pivoting to criticize the Build Back Better Act as a "socialist agenda item" despite its potential to benefit economically vulnerable households.

In response, several cryptocurrency firms shifted their investments to stablecoins—lower-risk cryptocurrencies pegged to fiat currencies like the U.S. dollar—with their collective value surging by $7.7 billion in February as investors responded to increasing financial instability.

"On the face of things Trump has kept his promise to the crypto industry, but whether that repays the contribution it made to him winning the election is questionable," said Impossible Cloud Network co-founder Kai Wawrzinek.

"With no solid plans to buy further coins mentioned, and indeed with Trump emphasising that the taxpayer would not contribute a single penny to any such endeavour, a reserve of coins already in reserve seems like a thin deal."

Fanning the flames of crypto policy

Despite its shortcomings, Trump's announcement of a formal crypto policy appears to have normalized attitudes towards crypto holdings, with senators in the U.S. state of Texas passing legislation that would establish a similar state-level reserve.

The new law, which still requires approval from the Texas House of Representatives, would see the state's government invest in Bitcoin and other cryptocurrencies through a special trust fund.

The senators argued that investing in crypto would protect the state's economy against central bank intervention and supply-side manipulation of the U.S. dollar's value—echoing allegations of currency manipulation levelled at China and others.

It remains to be seen whether the upswell of cryptocurrency reserve policy could trigger similar moves in Australia, with policies currently under review but the Reserve Bank of Australia long skeptical about the role of Bitcoin or mooted central bank digital currencies (CBDC).

The U.S. Congress is also considering legislation that would create a national bank to issue a CBDC, which could compete with the cryptocurrency markets and render the SBR obsolete.

However, with the U.S. now managing cryptocurrency and 23 other U.S. states reportedly considering similar moves, sentiment is shifting rapidly.

And according to Nigel Green, CEO of financial advisory deVere Group, that shift in policy clarity will resonate with institutional investors, central banks, and sovereign wealth funds.

"Bitcoin is no stranger to market overreactions, with its price often making dramatic moves in response to even minor news events or changes in sentiment," said Green, who called the policy a "game-changer" and noted that "trading on immediate sentiment rather than long-term implications… creates opportunities."

"This executive order makes it more