President Donald Trump signed an executive order on Thursday to establish a government bitcoin reserve, marking a significant shift in the United States' approach to cryptocurrency. This digital reserve mirrors the value and security of Fort Knox, aiming to capitalize on bitcoin's reputation as "digital gold." The move aligns with Trump's campaign promise to enhance America's standing in the crypto space, a pledge that resonated with wealthy crypto industry players who backed his election campaign.
The origins of bitcoin trace back to the 2008 financial crisis when an anonymous creator, or group of creators, launched it as an alternative currency. Over the years, bitcoin has transformed from a libertarian experiment into a mainstream asset with a market cap of approximately $1.7 trillion. With its supply capped at 21 million coins, supporters argue that bitcoin's scarcity makes it an effective hedge against inflation.
Historically, the U.S. government has sold off around 195,000 bitcoins for $366 million over the past decade. However, under the new executive order, the U.S. will retain an estimated 200,000 bitcoins seized through criminal and civil proceedings. David Sacks, an advocate for the reserve, emphasized:
"The U.S. will not sell any bitcoin deposited into the Reserve. It will be kept as a store of value. The Reserve is like a digital Fort Knox for the cryptocurrency often called 'digital gold'" – David Sacks
The executive order empowers the Treasury and Commerce Departments to devise budget-neutral strategies for acquiring more bitcoin. Additionally, it establishes a "U.S. Digital Asset Stockpile" for holding other seized cryptocurrencies besides bitcoin. Despite these developments, the U.S. government has yet to conduct a full audit of its bitcoin holdings.
Trump's initiative comes as crypto prices surged following his election victory last year, with bitcoin crossing the $100,000 mark for the first time in early December. Trump did not shy away from taking credit for this milestone, famously posting "YOU’RE WELCOME!!!" on social media.
