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Trump fails to establish a strategic bitcoin reserve
Donald Trump speaking at the 2024 Bitcoin Conference in Nashville, Tennessee.
The Washington Post | The Washington Post | Getty Images
“For too long, our government has violated the fundamental rule that every bitcoiner knows by heart: never sell your bitcoin,” Trump said at this year’s Bitcoin Conference in Nashville.
“If elected, it will be the policy of my administration, the United States of America, to retain 100% of all bitcoin that the United States government currently holds or acquires in the future,” he said.
Trump’s strategy of permanently holding his share of bitcoin, both during bull and bear markets, is being strongly encouraged in cryptocurrency circles., although this is not the current approach of the United States government.
Currently, the The United States Marshals Service regularly auctions bitcoin and other cryptocurrencies held in the country’s coffers as ether AND litecoinThese sales can sometimes trigger drops in cryptocurrency prices, as at the beginning of this month as Germany began liquidating hundreds of millions of dollars in bitcoin it had seized.
In a closed-door roundtable with a mix of donors before Trump’s remarks on Saturday, the former president did not discuss the mechanics of his plan but said he thought it would make sense for the government to hold bitcoin.
According to two people in the room, the meeting was attended by investors Tyler and Cameron Winklevoss, musician Kid Rock, Republican Senators Cynthia Lummis, Bill Hagerty and Marsha Blackburn, and others.
Trump’s proposal was less revolutionary than some cryptocurrency enthusiasts had expected, and failed to keep pace with the more radical speeches of third-party presidential candidate Robert F. Kennedy Jr.
“I understand that tomorrow President Trump may announce his plan to build a Fort Knox of bitcoin and authorize the United States government to purchase one million bitcoins as a strategic reserve,” Kennedy said during his speech at the Bitcoin Conference on Friday.
Kennedy went further than Trump, promising to establish a strategic reserve of 4 million bitcoins to match the country’s current gold holdings, some of which are held near the Fort Knox military base. The independent presidential candidate said he would sign an executive order directing the U.S. Treasury to purchase 550 bitcoins a day, an act that would fundamentally change how the cryptocurrency is regulated and valued.
As bitcoin becomes an increasingly central campaign issue, driven largely by the growing presence of the cryptocurrency lobby in Washington, Trump’s reluctance to share Kennedy’s commitment to “Bitcoin Fort Knox” is notable.
But Trump’s reserve is indicative of the complications that come with promising a strategic reserve of bitcoin on par with the gold standard.
The Trump campaign did not immediately respond to a request for comment.
In short, no.
An executive order wouldn’t be enough to create a U.S. bitcoin reserve. The president would likely need new legislation and congressional approval to pass it. Some lawmakers have started that process.
Shortly after Trump’s keynote speech at the Bitcoin Conference on Saturday, Senator Lummis of Wyoming announced her plan to introduce new legislation that would support a strategic bitcoin reserve.
“In five years, the United States will collect 1 million bitcoins, five percent of the world’s supply,” Lummis said. “And that will be held for a minimum of 20 years and can be used for one purpose: to reduce our debt.”
Lummis added that creating this type of reserve would help strengthen the dollar against rising inflation.
The U.S. government has a wealth of bitcoin that it steals from financial criminals through high-profile sting operations.
The current bitcoin reserve could serve as the foundation for the strategic bitcoin reserve, which the U.S. government would build upon by regularly purchasing a certain number of bitcoins.
These additional bitcoin purchases would likely be paid for, at least in part, by U.S. taxpayers.
Under Senator Lummis’s bill, which is expected to be introduced in the coming days, a bitcoin reserve would be paid for with “existing funds” from the Treasury Department, which includes tax revenues.
The ultimate goal would be to reduce the federal deficit, Lummis said at the Bitcoin Conference, which could potentially offset the initial spending.
Passing a bill to establish a reserve like the one Lummis is proposing would most likely require a landslide victory by Republicans in November: the White House, Senate and House.
The odds of this kind of red wave appeared to be increasing for much of July as Democrats and independents turned away from President Joe Biden.
But with Vice President Kamala Harris leading the Democratic ticket, the 2024 election will be a whole new ballgame.
A bitcoin reserve would give the digital currency an even greater level of legitimacy, building on the momentum of Wall Street’s growing adoption of the digital asset.
In JanuarySpot bitcoin exchange-traded funds have launched on U.S. markets for the first time ever with the blessing of the U.S. Securities and Exchange Commission. Many saw the listing as an event that cemented bitcoin’s place as an asset class here to stay.
However, launching a national reserve would be a stunning promotion for the teenage currency, which launched in 2009 and has since seen volatile performance with occasional windfalls for its investors. Trump himself was a bitcoin critic as recently as 2021, calling the currency “a scam.”
In the short term, bitcoin’s new status would send the cryptocurrency’s price skyrocketing.
“If the U.S. government created a strategic reserve, other countries would probably do the same, and that would take a lot of bitcoin off the market,” he said. Digital MarathonCEO Fred Thiel. “That then determines the entire price.”
For now, bitcoin is holding steady around $68,000 as markets ignore Trump’s promises on bitcoin, which have proven to be much less aggressive than expected.