Original Title: The Blueprint For A National Bitcoin Reserve

Original Author: Stefanie Wayco, Matthew Catani

Original Translation: Bai Hua Blockchain

1. The Trump Administration's Policy

1) The Trump Administration is Moving Towards a Crypto-Friendly Policy

US President Donald Trump is gradually pushing for a government that supports cryptocurrencies. One clear signal is his appointment of David Sacks as the White House's AI and Cryptocurrency Affairs Commissioner.

This appointment has sparked widespread speculation: how will the "Cryptocurrency Affairs Commissioner" actually operate? Does this position have real policymaking power? Will it drive a clearer regulatory framework? Is Sacks just an advisor without an official government position and authority? Will this role lead to the creation of a new national-level cryptocurrency reserve mechanism, where the government holds and protects digital assets?

2) National Cryptocurrency Reserve: Driving the Integration of Regulation and Blockchain Technology

If the US supports the establishment of an official cryptocurrency reserve, this could bring much-needed policy clarity to the current digital asset space, such as clarifying which government agency will regulate cryptocurrencies. This would not only help facilitate the widespread integration of cryptocurrencies in daily payments and investments, but also promote the application of Blockchain technology in large-scale government projects.

As the most widely recognized digital asset, Bit has long been seen as the industry standard, and Trump has also publicly voiced support for establishing a strategic Bit reserve.

Under the new government leadership, the US has an opportunity to lead a wave of innovative transformation, ushering in a new era centered on "digital credit" and "global acceptance" - not just for Bit, but for the entire cryptocurrency ecosystem, whether they are defined as securities or commodities.

2. Digital Asset Diplomacy: How the Federal Reserve Can Utilize Cryptocurrencies

1) The Role of the Federal Reserve

As the central bank of the US, the Federal Reserve is responsible for managing monetary policy, controlling inflation, regulating financial institutions, ensuring the efficient operation of the payment system, and protecting consumer rights.

The core feature of the Federal Reserve is its political independence, which allows it to focus on long-term economic stability. At the same time, it needs to closely collaborate with other federal agencies, such as the US Treasury, the US Securities and Exchange Commission (SEC), and the Federal Deposit Insurance Corporation (FDIC), to provide comprehensive regulation and financial stability.

For example, the Federal Reserve works with the Treasury to manage government debt issuance and bond market liquidity, collaborates with the SEC to maintain the stability of financial markets, and cooperates with the FDIC to ensure deposit safety and the integrity of the banking system.

To achieve these goals, the Federal Reserve utilizes various policy tools, including adjusting interest rates to influence borrowing costs, buying and selling US Treasuries through open market operations to control market liquidity, and setting reserve requirements to ensure banks maintain sufficient liquidity.

Furthermore, the Federal Reserve is responsible for regulating core parts of the national payment and settlement system, including electronic payment processing and currency supply management. In the future, whether the Federal Reserve will further venture into the cryptocurrency realm and become part of US financial policy remains to be seen.

2) The Vision of a Cryptocurrency Reserve

Trump's proposed "cryptocurrency reserve" plan - whether to enhance financial stability, curb inflation, manage national debt, or drive innovation - requires strategic collaboration, and the Federal Reserve is undoubtedly the most suitable institution to lead this process.

Just as in its role in traditional asset management, if the Federal Reserve can participate in the management of a cryptocurrency reserve, it can not only ensure that the plan aligns with overall fiscal and monetary policy goals, but also directly influence its success or failure.

Furthermore, the new administration's acceptance of cryptocurrencies also reflects its confidence in the Federal Reserve's ability to effectively manage a cryptocurrency reserve.

A national-level cryptocurrency reserve can be viewed as a strategic financial tool similar to traditional reserve assets like gold. Supporters believe that establishing a cryptocurrency reserve can help reduce national debt, release more US Dollar liquidity, and establish cryptocurrencies as long-term financial assets.

Regardless of whether crypto assets are classified as securities, commodities, or currencies, such a reserve mechanism could become a stabilizing factor in the market and enhance the credibility and status of cryptocurrencies within the financial system.

3. Cryptocurrencies: New Commodities and the "Digital Gold" Standard

1) Historical Context and Standards of the Financial System

Financial standards play a crucial role in economic stability and consumer trust. Historically, the gold standard provided a fixed framework for the value of national currencies, tying their value to a specific amount of gold.

Under the gold standard system, currencies could be exchanged for gold at a fixed rate, providing stability and predictability for financial markets and international trade. Central banks maintained fiscal discipline by holding gold reserves and limiting the money supply to match the size of their gold reserves.

Today, the US government provides a "full faith and credit" system to guarantee various securities, even without physical backing, to ensure the reliability of assets. This principle means the government unconditionally guarantees the fulfillment of its debts, thereby enhancing market confidence in government-issued securities.

For investors, the government's credit guarantee makes investment tools like US Treasuries more secure and reliable, as these debts are backed by the government's taxing power or money-issuing capacity, providing a stable credit system for the market.

From a policy perspective, the full faith and credit system allows the government to efficiently raise funds through debt financing to support critical national projects like infrastructure development and emergency relief programs. It is also the foundation for broader financial system trust, supporting policies that promote economic growth and resilience.

If cryptocurrencies can gain more formal recognition within this framework, they may become a new strategic reserve asset after gold and government bonds, potentially ushering in a "digital gold" era for the global financial system.

2) Crypto Plan: Towards a Clear Regulatory Framework

Wyoming Senator Cynthia Lummis has been advocating for the establishment of a national Bit reserve, with a plan to accumulate 1 million Bits over 20 years to hedge against inflation and serve as a supplementary asset to the US Dollar.

The proposal includes converting the Federal Reserve's gold certificates to Bit and establishing a strategic reserve, requiring a minimum holding period of 20 years.

The future cryptocurrency regulatory framework must address the following key issues:

• Property rights and ownership protection

• Secure custody solutions

• Which agency will regulate cryptocurrencies

• When and how to classify them as securities based on the 1946 US Supreme Court SEC v. Howey case, and whether they should be treated as commodities

Lummis' "Cryptocurrency Regulatory Act" aims to address these regulatory challenges, clearly distinguishing between securities and commodities to simplify compliance for cryptocurrency businesses. The bill also designs specific funding mechanisms and a regulatory framework, planning to transfer some crypto asset oversight from the SEC to the Commodity Futures Trading Commission (CFTC).

As the cryptocurrency market rapidly evolves, courts face challenges in determining whether certain digital assets are securities or commodities. The current legal standards still have many gray areas, making it difficult for the industry to follow a unified regulatory standard. Therefore, a clearer and more comprehensive regulatory framework is crucial.

The Howey test still applies, but the 1946 law that established it cannot fully apply to cryptocurrencies, as the courts at the time could not have foreseen the emergence of digital assets.

While digital assets themselves are not equivalent to securities, if the new administration fully promotes the development of the cryptocurrency industry and embraces cryptocurrency reserves, then establishing a new regulatory framework to clearly define the boundaries between securities and commodities may become a reality.

Clearer legal standards and regulatory frameworks will help businesses better operate cryptocurrency trading platforms, make it easier for institutional investors to participate in the market, allow consumers to buy, sell, and use digital assets without worry, and continuously enhance market confidence and trust in cryptocurrencies.

3) Strategic Petroleum Reserve Model: Lessons for Cryptocurrency Reserves

The U.S. Department of Energy (DOE), through the management of the Strategic Petroleum Reserve (SPR), has demonstrated how the government's maintenance of commodity reserves can impact the market and policy.

Although the Strategic Petroleum Reserve is primarily aimed at the energy industry and indirectly affects a wide range of consumers, which is different from the cryptocurrency industry, it can still serve as a basic model for establishing cryptocurrency reserves.

The core functions of the Strategic Petroleum Reserve include:

• Stabilizing oil prices and preventing market volatility

• Offsetting fiscal deficits and providing fiscal leverage for the government

• Enhancing global market influence and providing strategic advantages in international energy competition

Similar to the role of the SPR in the energy market and inflation control, cryptocurrency reserves can also influence the digital asset market and even become a monetary policy tool.

In the management mechanism of the SPR, the DOE is responsible for daily operations, but the President has the authority to order the use of the reserves, and Congress can also authorize the sale of SPR crude oil to support government spending or respond to emergencies, such as legislatively required periodic sales to adjust reserve levels.

Therefore, the Strategic Petroleum Reserve not only affects financial and monetary policy, but also has a direct impact on the energy market, commodity prices, and inflation expectations.

Similarly, cryptocurrency reserves can:

• Stabilize the cryptocurrency market and reduce price volatility

• Hedge against economic instability and provide a financial hedging tool

• Influence the global adoption of cryptocurrencies and enhance the United States' leading position in the digital asset market

How Congress authorizes the use of SPR funds for government projects may also determine the future use of cryptocurrency reserves through legislation.

4. Bitcoin Reserves: A New Role for the Federal Reserve

If a national-level Bitcoin reserve is established, the Federal Reserve (Fed) will play a role in the cryptocurrency market similar to the SPR's role in the energy market, while the CFTC (Commodity Futures Trading Commission) can take on a regulatory function similar to the DOE, responsible for the execution and supervision of the cryptocurrency reserve.

In this model, the Federal Reserve will not only be able to:

• Strategically formulate cryptocurrency-related policies

• Manage and stabilize the government's cryptocurrency assets

• Ensure the sufficiency of reserve assets to meet fiscal needs and generate revenue

• Protect investor interests and ensure market stability

Furthermore, the Federal Reserve will still retain its core functions, including:

• Setting interest rates and influencing market liquidity

• Borrowing and financing to drive government projects

• Using cryptocurrencies as collateral assets to enhance fiscal flexibility

The bill proposed by Lummis also emphasizes that the U.S. Department of the Treasury will play a key role in the management and protection of the Bitcoin reserve, just as it currently collaborates with the Federal Reserve.

1) The Future of Decentralized Cryptocurrency Vaults

To enhance transparency and security, the government may adopt decentralized vault systems as a storage solution for the national cryptocurrency reserve. The Treasury Department can:

• Manage and regulate the custody of cryptocurrency assets to ensure the safety of the national reserve

• Establish a custody mechanism that meets regulatory standards to prevent asset misuse

• Ensure the reserve is publicly transparent and aligns with the market's trust mechanism for government asset management

This mechanism not only solves the issues of ownership and custody, but also enhances public confidence in cryptocurrencies and promotes the recognition of "full faith in crypto" by the entire society.

2) The Balancing Act: Efficiency, Innovation, and Development

The concept of a national-level cryptocurrency reserve showcases a vision for reshaping the U.S. economy - it combines traditional financial principles with emerging digital technologies to drive the modernization of the financial system.

However, the evolution of cryptocurrency policy marks an important turning point, as it gradually transitions from Bitcoin's initial decentralized vision to a more regulated, government-led model.

The core challenge lies in balancing the historical ideals of decentralization while ensuring users can efficiently, securely use, invest, and innovate with digital assets.

Even though the industry still emphasizes decentralization, its development has reached a stage where regulatory oversight has become imperative. Faced with ambiguous legal standards and the lack of consumer protection mechanisms, moderate government regulation and policy guidance have become inevitable. The new administration's trust and support for cryptocurrencies also signals that a policy framework is about to be implemented.

The formulation of rules is crucial, as only with clear rules can market participants compete fairly.

By embracing cryptocurrencies, the new administration has the opportunity to drive a future centered on innovation, stability, and global leadership. Whether at the federal level, state government initiatives, or regulatory reforms, the United States stands at the crossroads of a new era of digital assets, and its strategic vision and adaptability will determine the future industry landscape.

3) Balancing Regulation: Challenges and Opportunities in Policy Advancement

Congressional approval still faces resistance. Some lawmakers express concerns about economic stability and inflation, while ongoing regulatory uncertainty and public skepticism may hinder the implementation of cryptocurrency reserves.

The key task of the new administration is to find a regulatory balance between efficiency and innovation. Only with proper oversight can the national-level cryptocurrency reserve and the entire cryptocurrency industry thrive in the United States.

It is worth noting that as other countries accelerate the implementation of cryptocurrency policies, the United States may fall behind in global competition if it does not take proactive measures.

Establishing a cryptocurrency reserve and introducing supportive regulations not only can consolidate the United States' leading position in the global cryptocurrency economy, but also will drive the growth of technological innovation and capital investment.

4) America's Responsibility: Building Confidence in the Global Cryptocurrency Capital

The United States has always been a leader in the global capital market, with high standards for consumer protection, data security, and financial transaction rules.

If other countries take the lead in digital asset regulation, and the United States fails to keep up, the global market may be subject to more unstable policy impacts. Therefore, the United States should clearly express its trust in cryptocurrencies ("full faith in crypto") and, as the center of the global cryptocurrency economy, formulate more robust policies.