On December 17, 2024, US time, Trump announced that he had won enough votes in the state electoral college meetings to officially win the presidency. Trump and his vice president Vance will be sworn in on January 20, 2025. This news is undoubtedly a "talisman" for the US crypto circle, and it can be foreseen that the prosperous crypto era in the US is about to come.
So, what crypto-friendly actions will the Trump team take next? The first thing that comes to mind is the "BTC Strategic Reserve Bill".
Whether during the election campaign or recently, Trump has mentioned the BTC strategic reserve many times. The latest news shows that Trump is considering establishing a strategic BTC reserve (SBR) using the US Treasury's Exchange Stabilization Fund after taking office; in addition, the American Bitcoin Policy Institute (a non-partisan non-profit organization) has already drafted this executive order, which will take effect as soon as Trump takes office.
In addition to the "White House player", some US states have also started to take action on BTC reserves. Several states, including Texas and Pennsylvania, have proposed specific bills to try to support fiscal stability by accepting BTC taxes or establishing local BTC reserves. These measures mark that the US is paving the way for the actual operation of BTC reserves, and the arrival of the new Trump administration will inject stronger momentum into this process.
The Global Trend of BTC Strategic Reserves
The US's promotion of BTC reserves not only changes the domestic crypto policy landscape, but also triggers a global BTC strategic reserve race. Although the attitudes of governments and regions towards this emerging asset are different, they are all gradually deepening their examination of the potential of BTC.
In Latin America, El Salvador is still the "pioneer" of global BTC reserves. Since announcing BTC as legal tender in 2021, El Salvador has continued to accumulate BTC reserves. The latest data shows that El Salvador's BTC holdings have exceeded 5,950 BTC. Recently, Brazil has been closely following El Salvador's footsteps and exploring the establishment of a BTC strategic reserve. In November 2024, Brazilian federal deputy Eros Biondini proposed a bill to establish a "BTC Sovereign Strategic Reserve" (RESBit) plan, aiming to include BTC in the national international reserve by 5%.
In Europe, Poland's BTC strategic reserve proposal has attracted much attention. Polish presidential candidate Sławomir Mentzen publicly advocates including BTC in the national reserve system and plans to attract more investors through crypto-friendly regulations and tax policies. Although no specific policies have been formed yet, the discussion in Poland has already triggered attention to BTC reserves across Europe.
In comparison, Asia's attitude seems more cautious. According to current media reports, except for Japan, other countries and regions have not yet made official statements to include BTC in their national strategic reserves. In Japan, the government's discussion on BTC reserves has just begun. Legislator Akira Hamada submitted an official request to the Japanese Diet in December, which has attracted high attention from the Japanese crypto community.
However, this BTC reserve race is not limited to the national level. Enterprises and financial institutions have also entered the BTC reserve arena, becoming a driving force to push up BTC and the overall crypto market.
Participation of Global Enterprises and Institutions
Data shows that currently 144 companies hold BTC. In fact, corporate BTC holdings are not new news this year.
As early as 2020, MicroStrategy, a US company, has been continuously increasing its BTC holdings. According to data on December 16, the company holds 439,000 BTC, with an average price of $61,725 per BTC. This means that MicroStrategy's current BTC holdings have a profit of over $20 billion. This amazing performance has made MicroStrategy the "leader" in corporate investment in BTC, and its BTC purchase and holding strategy has also provided a reference for other traditional companies to explore digital asset reserves. In addition to MicroStrategy, crypto-friendly companies such as Tesla and Block (formerly Square) have also joined this ranks, achieving asset diversification and inflation resistance through BTC allocation.
Looking back to this year, more companies around the world have started to set up BTC investment plans. For example, Canadian company Jiva Technologies recently announced plans to purchase $1 million worth of BTC as part of its financial strategy; US company Marathon Digital announced a new $1.1 billion BTC investment; Japanese company Metaplanet plans to increase its holdings to 10,000 BTC by 2025.
At the same time, traditional financial institutions represented by BTC spot ETFs have also been continuously increasing their investment in BTC. According to SoSoValue data on December 18, the net inflow of BTC spot ETFs reached $494 million the previous day, which has been in net inflow for 14 consecutive days.
In the global competition, Hong Kong, as an Asian financial center, although the government level has not yet entered the field, enterprises have already taken the lead. For example, Hong Kong-listed company Boyaa Interactive (HK.0403) announced that it holds 2,641 BTC, and then exchanged 515 BTC, with its holdings exceeding 3,000 BTC; Nasdaq-listed company Nano Labs (Nasdaq:NA) recently announced plans to invest $50 million in BTC asset allocation. Previously, listed companies such as Guofuchuangxin and Coolpad Group have also started to allocate BTC.
In contrast, the actions of mainland Chinese companies in BTC reserves are few and far between. The only one is Huabao Overseas Technology (QDII-FOF-LOF) C, which holds BTC ETFs through indirect investment. Subsequently, possibly due to the exposure of a large number of media articles, the fund announced a temporary suspension of this indirect investment.
This stark difference is mainly due to the uncertainty of policies and compliance risks in China. Since China comprehensively banned crypto-related business activities in 2021, direct participation of companies in BTC reserves has been hindered in terms of both security and legal compliance. Is there a solution to this?
Investment Strategies of Overseas Crypto Funds
Although domestic policies have set many restrictions on direct holding of BTC, this does not mean that mainland companies are completely excluded from the BTC reserve race. In fact, by setting up offshore funds in Hong Kong or using compliant overseas crypto funds, mainland companies may be able to find a legal path to participate in this global competition.
In the past two years, Hong Kong has gradually established a comprehensive virtual asset service provider (VASP) licensing system, and has also gradually relaxed the strong restrictions on the virtual asset industry. In this context, mainland Chinese companies can choose to set up offshore funds in Hong Kong and entrust licensed digital asset management institutions to allocate assets, thereby achieving compliant BTC holdings. This model not only complies with legal regulations, but also can take advantage of the policy advantages of the Hong Kong market to prepare for potential future policy relaxation.
In addition to the Hong Kong market, mature overseas crypto funds are also a feasible path. For example, the Grayscale Bitcoin Trust provides a compliant BTC investment method for institutional investors through a trust structure. This approach can effectively avoid the policy risks associated with direct BTC holdings. However, if mainland companies want to participate in similar investments, they need to establish compliant entities overseas and operate through Hong Kong or other offshore jurisdictions to ensure the legality of fund sources and uses. Similarly, this path not only solves the legal entity problem, but also provides higher operational flexibility.
In addition, in recent years, traditional financial institutions such as Fidelity and BlackRock have launched BTC spot ETFs and other crypto asset investment products. These funds provide institutional investors with a transparent and legal way to hold BTC, providing more options for mainland companies to invest through overseas entities. However, this model also requires solving the compliance issues of cross-border capital flows. The flow of cross-border capital must strictly comply with China's foreign exchange management policies, and ensure the transparency of fund sources and uses in the operation.
Summary by Mankiw
The significance of Bit reserves has long since surpassed asset allocation itself, and it is becoming an important piece in the global digital economy strategy. The push for Bit reserves by the new Trump administration has not only ignited a global fervor for digital asset competition, but also brought a brand-new opportunity for companies to find new directions in the digital economy wave. However, for Chinese companies, policy constraints and regulatory risks are undoubtedly a threshold that requires cautious handling.
By setting up offshore crypto funds in Hong Kong, or investing in regulated overseas mature crypto funds, Chinese companies can still find a breakthrough in this global competition within the boundaries allowed by policies, and gain more initiative in the layout of the future digital economy. But this process must strictly adhere to the bottom line of laws and compliance.
