On March 6, 2025, U.S. President Trump signed the executive order "Establishing a Strategic Bit Coin Reserve and a U.S. Digital Asset Reserve". The next day, the White House Crypto Summit was held.
This is another important milestone for the Crypto industry.
Bit Coin Enters the Mainstream: A New Chess Game for the U.S. Strategic Reserve
Let's look at this from the perspective of the U.S. government. The purpose of the U.S. establishing a Bit Coin strategic reserve is to strengthen and consolidate the U.S.'s dominant position in the global financial system.
The executive order states clearly: "The U.S. government currently holds a large amount of BTC, but has not yet developed policies to leverage the strategic value of these BTC in the global financial system. Just as it is in the national interest to properly manage the government's ownership and control of other resources, we must leverage rather than restrict the potential of digital assets to promote national prosperity."
The U.S. has precedents for strategic reserves, such as the Strategic Gold Reserve and the Strategic Petroleum Reserve.
Less than a year after the end of the Petro-Dollar system, the U.S. is establishing a strategic Bit Coin reserve. This shows that the consensus on Bit Coin as 'Digital Gold' is already very strong.
The Strategic Considerations of the U.S. Bit Coin Reserve
1. Consolidation of the U.S. Dollar's Financial Hegemony
The U.S. dollar has long dominated the global financial system and is the main settlement currency for international trade and financial transactions. However, with changes in the global economic landscape, the rise of emerging economies, and the reshaping of the geopolitical landscape, the U.S. dollar's financial hegemony is facing challenges.
As a decentralized digital currency, Bit Coin has unique advantages in global circulation, as its transactions are not controlled by traditional financial institutions and governments, and can transcend geopolitical constraints to achieve rapid transactions and convenient circulation globally.
If the U.S. strengthens the connection between the U.S. dollar and Bit Coin/Crypto, and takes the lead in establishing a Bit Coin strategic reserve, it will be able to occupy the high ground in the Crypto field, incorporate the Crypto market into the U.S. dollar settlement system, and thus consolidate the U.S. dollar's position in international financial transactions, which will undoubtedly be another powerful defense of its U.S. dollar financial hegemony in the new financial era.
2. A Powerful Tool Against Inflation
Theoretically, establishing a strategic Bit Coin reserve can to some extent hedge against inflation.
Bit Coin is 'Digital Gold' and can be a potential 'weapon' against inflation and solving the national debt problem. All governments will stimulate the economy by increasing the money supply, leading to currency depreciation and inflation. Bit Coin has a fixed total supply, so it is seen as the ideal asset to resist inflation.
Far-Reaching Impact on the Crypto Market
Trump's Executive Order is Less Favorable than Market Expectations
The key points in this executive order are:
1. The Treasury Department should set up an office to manage and control the custody accounts of the "Strategic Bit Coin Reserve" (SBR), with the funding source being the BTC forfeited in criminal or civil cases held by the Treasury Department. The BTC deposited in the SBR shall not be sold.
2. The Treasury Department should set up an office to manage and control the custody accounts of the "U.S. Digital Asset Reserve", with the funding source being all digital assets other than BTC held by the Treasury Department. The Treasury Department should develop a responsible management strategy for the U.S. Digital Asset Reserve (no mention of not being able to sell).
Here is the English translation:3. The Minister of Finance and the Minister of Commerce should formulate strategies to obtain additional government BTC without increasing the budget or imposing additional costs on American taxpayers. (How to obtain more BTC? You figure it out...)
The U.S. government currently holds about 200,000 BTC, which were confiscated from criminal or civil cases. Trump instructed the Secretary of the Treasury and the Secretary of Commerce to develop a strategy to "increase the Bitcoin reserve holdings without any cost to the taxpayer."
The plan of this executive order did not meet market expectations, mainly because the community was whetted by another federal-level bill - the "Bitcoin Act" submitted by Senator Cynthia Lummis (proposing that the U.S. Treasury purchase 1 million BTC and hold it for 20 years), which has already been rejected.
Crypto-related bills still being pushed at the federal level have a neutral impact on the market
In the U.S., there is a difference between presidential executive orders (EOs) and congressional legislation. Unfortunately, recent federal-level Bitcoin-related bills have not been successfully legislated. Currently, three Crypto-related bills are being pushed at the federal level:
- H.R.148: Keep your Coins Act of 2025
- S394: GENIUS Act of 2025
- HRes111: Expressing support for blockchain technology and digital assets.
Among them, HRes111 is a bit messy, with little content, and is likely to fail; the Keep your Coins Act (H.R.148) proposes to protect individuals' self-custody rights for crypto assets; the GENIUS (Guiding and Establishing National Innovation in U.S. Stablecoins) Act is a regulatory bill for U.S. dollar stablecoins, setting licensing and reserve requirements for stablecoin issuers.
Trump stated at the White House crypto summit that he hopes to have the U.S. dollar stablecoin innovation bill (GENIUS Act) on his desk for signing before the August recess. The community may not have high expectations for this bill, as it is hard to see any substantive positive impact.
Strategic Bitcoin Reserve Act bills by state governments may be expected
In addition to federal-level legislation, some state governments are also actively promoting the Strategic Bitcoin Reserve Act, such as Arizona, Texas, New Hampshire, and Oklahoma. However, 5 states have already rejected it, including Montana, North Dakota, South Dakota, Pennsylvania, and Wyoming.
The process for state governments to establish a Strategic Bitcoin Reserve Act is roughly as follows: first, a state legislator or committee drafts and submits it to the state legislature; then it goes through voting in the state House and Senate; finally, if passed by both houses of the state legislature, it is sent to the governor for signing.
The image below shows the legislative process of the Strategic Bitcoin Reserve Act in Arizona:
The content of the Strategic Bitcoin Reserve Act varies from state to state. For example, Oklahoma proposes to allow the state government to invest up to 10% of public funds in BTC or any digital asset with a market cap over $500 billion; Kentucky proposes to invest up to 10% of surplus cash in cryptocurrencies with a market cap over $750 billion and stablecoins with appropriate regulatory approval.
Overall, Trump's Strategic Bitcoin Reserve EO is definitely a long-term positive. In terms of policy, as long as Trump's executive order does not change overnight, the policy environment will be friendly for at least the next few years. In terms of funding, although there is no plan to increase holdings by millions of BTC at the federal level, if state proposals are passed, there will be real investment. In terms of market supply and demand, on the supply side, the BTC confiscated by the U.S. government will be deposited into the Strategic Bitcoin Reserve and not sold, reducing the selling pressure in the market; on the demand side, the U.S. government's Strategic Bitcoin Reserve decision may attract more investors' interest in BTC, including some traditional financial institutions and large companies, which may eliminate their concerns about engaging in crypto business and even lead to more countries establishing strategic BTC reserves.
Conclusion
Quoting Michael Saylor's words: History will record the moment the U.S. established a Strategic Bitcoin Reserve - this is a turning point in the 21st century financial and geopolitical landscape.
