Author: 0xCousin

On March 6, 2025, US President Trump signed the Executive Order "Establishing a Strategic Bit Reserve and a US Digital Asset Reserve". The next day, the White House Crypto Summit was held.

This is another important milestone for the Crypto industry.

Bit Enters the Mainstream: A New Chess Game in the US Strategic Reserve

Let's look at this from the perspective of the US government. The purpose of the US establishing a Bit strategic reserve is to strengthen and consolidate the US's dominant position in the global financial system.

The executive order states clearly: "The US 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 US has precedents for strategic reserves, such as:

Strategic Gold Reserve - In the 19th century, the US implemented the gold standard, with the value of the US dollar supported by gold reserves. In 1933, President Roosevelt signed Executive Order 6102, prohibiting private ownership of gold, and forced the reclamation of gold and its deposit in the Federal Reserve Bank; in 1934, the US introduced the "Gold Reserve Act", transferring gold reserves to the Treasury Department; in 1944, the US passed the Bretton Woods system, promising to exchange gold at $35 per ounce, making the US dollar the international currency; it was not until the Nixon administration in 1971 that the US announced the decoupling of the US dollar from gold, the Bretton Woods system collapsed, and the gold standard ended.

Strategic Petroleum Reserve - In 1974, the US reached an agreement with Saudi Arabia and OPEC countries that international trade in oil must use the US dollar, naturally making the US dollar the global foreign exchange reserve currency; in 1975, the US Congress passed the "Energy Policy and Conservation Act", establishing the Strategic Petroleum Reserve (SPR), which at its peak reached nearly 700 million barrels, but by 2024 the reserves had dropped to 350 million barrels. On June 9, 2024, the oil-for-dollar agreement between the US and Saudi Arabia officially expired, and Saudi Arabia announced that it would not renew the agreement.

Of course, there are also some strategic reserves with less far-reaching impact, including uranium, rare earths, silver, and food.

Less than a year after the end of the petrodollar system, the US has established a strategic Bit reserve. This shows that the consensus on Bit as "digital gold" is already very strong.

The Strategic Considerations of the US Bit Strategic Reserve

1. Consolidation of the US dollar's financial hegemony

For a long time, the US dollar has dominated the global financial system and is the main settlement currency for international trade and financial transactions. However, with the changes in the global economic landscape, the rise of emerging economies, and the reshaping of the geopolitical landscape, the US dollar's financial hegemony is facing challenges.

As a decentralized digital currency, Bit has unique advantages in global circulation, as its transactions are not controlled by traditional financial institutions and governments, and can break through geopolitical constraints to achieve rapid transactions and convenient circulation globally.

If the US can strengthen the connection between the US dollar and Bit and Crypto, and take the lead in establishing a Bit strategic reserve, thereby occupying the high ground in the Crypto field and incorporating the Crypto market into the US dollar settlement system, it will undoubtedly be another powerful defense of its US dollar financial hegemony in the new financial era.

As Trump mentioned at the White House Crypto Summit, establishing a Bit reserve is like building a "virtual Fort Knox" (Fort Knox is a US base that stores the national gold reserve). He also mentioned that lawmakers in Congress are pushing for bills to provide clarity on US dollar stablecoins and digital asset market regulation, and he will ensure the long-term stability of the US dollar's position.

The chess pieces have been laid, and the momentum has been formed. From a top-level design perspective, this may be the first time such an idea has been publicly announced. But in fact, US companies have already been deploying in key tracks in the Crypto field: in asset issuance - although the industry is still critical of the inability to achieve Trustless in the process of RWA tokenization, Franklin Templeton has become the traditional financial institution with the largest scale of US debt RWA issuance; in asset securitization - the total assets under management of the US BTC spot ETFs issued by traditional financial institutions led by BlackRock have already exceeded $100 billion; in asset trading and custody - Nasdaq-listed Coinbase is the main custodian of these ETFs.

What is currently lacking is a clear regulatory framework, so that the Crypto industry can avoid similar "unclear boundary suppression" by the Biden administration in the future, as well as the cross-cutting, disorderly, and vague regulation of multiple government departments.

2. A tool to fight inflation

In theory, establishing a strategic Bit reserve can hedge against inflation to a certain extent.

According to World Bank data, the M2 curve in the US from 1960 to the present is as follows:

The US federal debt curve is as follows:

The total US federal debt has exceeded $36 trillion, a historic high. Moreover, the ratio of US federal debt to GDP has continued to rise in recent years, reflecting that the growth rate of debt has exceeded the growth rate of the economy. Due to the expansion of debt and the current high interest rates, the US federal government's interest expenditure is expected to reach about $882 billion in 2024, posing a heavy fiscal burden.

Bit is "digital gold" and can be a potential "tool" to fight inflation and solve the national debt problem. All governments will stimulate the economy by issuing more currency, leading to currency depreciation and inflation. Bit has a fixed total supply, and is therefore seen as the ideal asset to resist inflation.

There are multiple reasons that have prompted the US government to establish a strategic Bit reserve. In addition to consolidating the US dollar's hegemony and fighting inflation, from the perspective of financial innovation needs, Bit and Blockchain have brought new development opportunities for the financial industry; from the perspective of global financial competition, as mentioned in this executive order, "the country that first establishes a strategic Bit reserve will gain a strategic advantage"; from the perspective of US government interests, Trump is fulfilling his campaign promises, and the influence of the US Crypto-related interest groups in this Trump administration has significantly increased, affecting government decision-making.

Far-reaching impact on the Crypto market

Trump's executive order is less positive than market expectations

There are a few key points in this executive order:

1. The Secretary of the Treasury should establish an office to manage and control the custody accounts of the "Strategic Bit 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 cannot be sold.

2. The Treasury Department should establish an office to manage and control the custody accounts of the "US 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 US Digital Asset Reserve (no mention of not being able to sell).

3. The Secretary of the Treasury and the Secretary of Commerce should develop strategies to acquire additional government BTC, without increasing the budget or imposing additional costs on US taxpayers. (How to acquire more BTC? You figure it out...)

The U.S. government currently holds about 200,000 BTC, which were forfeited from criminal or civil cases. Trump has instructed the Treasury Secretary and Commerce Secretary to develop a strategy to "increase the Bitcoin holdings without any cost to taxpayers."

The plan of this executive order did not meet market expectations, as 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 are some differences 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 and has little content, and is likely to fail; the Keep your Coins Act (H.R.148) proposes to protect individuals' self-custody rights over 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 said 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's hard to see any substantial positive impact.

Strategic Bitcoin Reserve bills at the state level may be worth looking forward to

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 generally requires: 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, 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 by state, for example: Oklahoma proposes to allow the state government to invest up to 10% of public funds in Bit 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 Bit reserve EO (Executive Order) is definitely positive in the long run.

In terms of policy, as long as Trump's executive order does not change frequently, the policy environment will be friendly for at least the next few years.

In terms of funding, although there is no plan at the federal level to increase holdings by millions of BTC, if state proposals are passed, there will be real investment.

In terms of market supply and demand, on the supply side, the Bit confiscated by the U.S. government will be deposited into the strategic Bit reserve and not sold, reducing the selling pressure in the market; on the demand side, the U.S. government's strategic Bit reserve decision may attract more investors' interest in Bit, including some traditional financial institutions and large companies, which may eliminate their concerns about engaging in crypto business, and may even lead to more countries establishing strategic Bit reserves.

Conclusion

Quoting Michael Saylor: History will record the moment the U.S. established a strategic Bit reserve - this is a turning point in the 21st century financial and geopolitical landscape.