Will the U.S. government actually establish a bitcoin (BTC) reserve? It seems to depend on the definition of “reserve” you use.
Would the government simply stop selling the bitcoin in its possession, as former President and now President-elect Donald Trump promised in his Nashville speech this summer? Or would it actively purchase bitcoin, as per the wishes of Senator Cynthia Lummis and Trump ally Robert F. Kennedy?
The government currently holds 208,109 bitcoin — worth over $19 billion — per Arkham Intelligence. That stockpile was acquired over time through confiscations related to criminal activities. Historically, the government has sold this seized bitcoin in auctions, but Trump announced in July that under his administration, the government would keep 100% of all the bitcoin it currently holds or acquires in the future.
It might sound like a simple policy, but there isn’t any established method to implement it, and the procedure would likely involve the coordination of various government agencies like the Department of Justice, the U.S. Marshals Services and the U.S. Treasury.
“We don’t have anything in writing, right? We’re just kind of going by a speech that was rather generic,” Perianne Boring, founder and CEO of crypto advocacy group The Digital Chamber, told CoinDesk. “Can you just move money between the federal agencies like that? I don’t know.”
“If you’re moving [bitcoin] out of the Department of Justice to the Treasury, and it’s like a strategic Bitcoin stockpile fund, that likely requires an act of Congress,” Boring added. “But again, I don’t know exactly how much [Trump] can do with his executive powers.”
Moish Peltz, a partner at Falcon, Rappaport and Berkman, told CoinDesk that the rules surrounding seized bitcoin might change on a department-by-department basis and vary depending on how the bitcoin was seized in the first place. “Some portion of the seized bitcoin might need an act of Congress, but not necessarily,” he said.
Moreover, the process could be gradual. “[The government’s] existing experience with the seizure and custody of large amounts of Bitcoin demonstrates competency and makes it easy to imagine from a technical perspective a relatively low level of difficulty in establishing a strategic reserve,” Peltz said. “Over time, this could evolve into a more significant stance as regulatory clarity improves, legislation is enacted (and implemented), and the government develops a more comprehensive digital asset strategy.”
Purchasing more bitcoin
Keeping seized bitcoin is one vision for the reserve. But Senator Lummis has argued for a more proactive approach in a new bill: for the U.S. to sell off a portion of its gold reserves and buy 1 million bitcoin. At current prices, that would entail spending a minimum of $90 billion for the acquisition, though the government would likely be front-ran if the bill ever passes.
“An executive order could also potentially initiate the process, but substantial financial commitments usually require an act of Congress to allocate funds and create a legal framework,” Peltz said.
Boring was optimistic about the bill passing. With Republicans soon to be in control of the House of Representatives, the Senate and the White House, “it’s absolutely possible to get it done,” she said, while noting that it was unlikely for the bill to go through the new Congress in the first 100 days.
But Nic Carter, a partner at Castle Island Ventures, a public blockchain-focused venture fund, wasn’t so sure. Congressional priorities when it comes to crypto involve passing a stablecoin bill and investigating Operation Choke Point 2.0, Carter posted last week after meeting with members of Congress and the Federal Reserve. The strategic reserve “didn’t come up in any of the convos I had,” he posted on X.
So could there be a legal loophole that allows the government to purchase bitcoin without Congressional approval? Maybe. Zack Shapiro, head of policy at the Bitcoin Policy Institute, argued last week in favor of a novel and untested theory: that the Treasury has the authority to acquire bitcoin through the Exchange Stabilization Fund (ESF) by purchasing bitcoin-denominated debt instruments.
“Upon maturity, the counterparty would repay the debt obligation in bitcoin, transferring the cryptocurrency to the Treasury,” Shapiro wrote. “This mechanism allows the Treasury to acquire bitcoin without directly purchasing it on the open market, thus avoiding potential market disruptions or price spikes that could result from large direct purchases.”
Bettors on Polymarket currently give 30% odds for the government to hold bitcoin reserves between January and April 2025.