Dennis Porter, the founder of the Satoshi Action Fund, has released a draft executive order prepared for President-elect Donald Trump to establish a Strategic Bitcoin Reserve Fund within the Exchange Stabilization Fund (ESF).
The order allows for an initial allocation of up to 2% of the total investment portfolio of the ESF for an 18-month trial period. Furthermore, the BTC held by the U.S. government will be used as the foundation for this Strategic Reserve Fund.
The draft order outlines a roadmap to integrate Bit into the ESF, a traditional fund used to stabilize the USD and respond to macroeconomic shocks. The draft also provides a legal framework to treat Bit as a reserve asset similar to foreign currency, while ending the auction of confiscated Bit held by U.S. agencies.
A key provision is that the U.S. Department of the Treasury will be authorized to purchase, hold, and manage Bit as part of the ESF investment portfolio. Additionally, Bit will be treated similarly to gold or foreign currency reserves.
Furthermore, the proposal calls for the Treasury Department to establish a working group to develop a custody system to ensure the safe management of the held Bit. This includes evaluating solutions to provide the Treasury with direct access to the reserve fund, leveraging existing custody infrastructure such as the system currently used by the U.S. Marshals Service (USMS).
The proposal also ends the auction of Bit seized by the USMS. Instead, the approximately 200,000 Bit currently under U.S. control — valued at $20.6 billion at the time — will be used as the initial foundation for the Strategic Bit Reserve Fund.
The draft includes robust oversight mechanisms to balance innovation and accountability. The Treasury Department will be required to publish semi-annual reports (a document summarizing the financial condition and operating performance) detailing transactions, Bit holdings, and risk management strategies for Congress and the President.
Additionally, the Treasury Inspector General and the Government Accountability Office (GAO) will conduct periodic audits, with annual public summaries to ensure transparency.
While the ESF provides the initial means to hold Bit, the draft acknowledges that this may not be a long-term solution.
Within 24 months, the Treasury Department will be required to submit a comprehensive report to Congress outlining the limitations and benefits of using the ESF as a Bit custodian, alternative legal frameworks for managing the reserves, and legislative proposals to formally establish the Strategic Bit Reserve Fund in U.S. federal law.
The proposal emphasizes that the creation of a Bit reserve fund will not interfere with the Federal Reserve's (Fed) independence in setting monetary policy. This provision is intended to address concerns that Bit integration could complicate traditional monetary policy frameworks or undermine confidence in the USD.
Instead, by leveraging Bit's status as a globally sovereign asset, this proposal aims to mitigate macroeconomic risks, stabilize the USD, and position the U.S. as a leader in financial innovation.
If implemented, this would be the U.S. government's most significant step in embracing Bit, with far-reaching implications for the cryptocurrency industry, U.S. economic policy, and global reserve practices.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.
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