Since the victory of the crypto-friendly candidate Donald Trump in the US presidential election, the US government's attitude towards the cryptocurrency sector has changed significantly. After taking office, Trump has introduced a series of policies supporting cryptocurrencies. The most notable of these is the establishment of the United States Strategic Cryptocurrency Reserve.
What is the United States Strategic Cryptocurrency Reserve?
This is a government-managed fund that holds Bitcoin and cryptocurrencies such as Ethereum, XRP, Solana, and ADA. This reserve is expected to help the country withstand threats such as inflation and economic instability. This plan is also part of the US's larger goal of becoming the global leader in the cryptocurrency industry. The BITCOIN Act, a draft bill, proposes to purchase at least 1 million BTC within five years. Importantly, the funding will come from the Federal Reserve's reallocation, not taxpayer money.
How will the Cryptocurrency Reserve be managed?
The Trump administration has introduced several policies to address the major challenges in managing cryptocurrencies. The US President has recently established a special task force under the US Securities and Exchange Commission to create a clear legal framework for cryptocurrencies.
When will the Cryptocurrency Reserve be established?
The President has recently signed an executive order related to the establishment of the reserve. Once this order is passed by Congress, it will become a reality.
What are the concerns about the Cryptocurrency Reserve?
An independent survey in December 2024 showed that only one out of 40 top economists supported the view that the Cryptocurrency Reserve will benefit the economy. Renowned economist Steven Rattner said: "The cryptocurrency reserve is a blatant waste of taxpayer money to enrich the cryptocurrency industry." Many industry leaders have strongly disagreed with Trump's decision to expand the reserve beyond Bitcoin. Coinbase CEO Brian Armstrong believes the reserve fund should only focus on Bitcoin as it is the simplest and most clearly analogous to gold.
Ripple has donated at least $49 million to Fairshake, a pro-cryptocurrency political action committee, during the election campaign. The company has even donated over $5 million to Trump's inauguration fund. Ripple's XRP is one of the cryptocurrencies expected to be included in the United States Strategic Cryptocurrency Reserve.
