5 questions about Trump’s crypto reserve plan

President Trump offered new details about his plan to create a strategic crypto reserve over the weekend, prompting the cryptocurrency market to rally after a few sluggish weeks.

While Trump’s announcement stoked excitement in the industry, questions remain over what the reserve could look like and how it might impact the digital currency space

Here’s are five key questions about Trump’s plan.

What could a crypto strategic reserve look like?

Trump’s comments confirmed his support for a cryptocurrency reserve and hinted at which digital assets could be included, but he offered few details on exactly how the stockpile could work.

“A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL [Solana], and ADA [Cardano],” Trump posted Sunday morning on Truth Social.

“And, obviously, BTC [bitcoin] and ETH [Ethereum], as other valuable Cryptocurrencies, will be at the heart of the Reserve,” he said in a follow-up post. “I also love Bitcoin and Ethereum!”

His comments built upon his executive order, signed in January, which established a working group on digital assets to be led by the White House’s artificial intelligence (AI) and crypto czar, David Sacks.

Th e order tasked the group with evaluating the creation and maintenance of a “national digital asset stockpile.” The group was expected to draft a criteria for the stockpile, which could be derived from the cryptocurrencies seized by law enforcement, the order stated.

The U.S. government is the largest holder of bitcoin, with an estimated total of about $14.8 billion in its possession, according to research by CoinGecko. A large part of this came from the U.S. government’s dismantling of Silk Road, an online black market.

The use of seized cryptocurrencies, however, could run into roadblocks as these assets often go back to the victims of financial crimes, Katherine Kirkpatrick Bos, general counsel for cryptography software company StarkWare, told The Hill.

“Stockpile is not a legally defined term. No one really knows what stockpile means,” she said. “So hence the question of whether that was in specific reference to the crypto that the United States has on hand at the moment.”

Yesha Yadav, associate dean and professor of law at Vanderbilt University, noted that while agencies work to track down victims, there are times when this is not possible and it ends up in U.S. hands.

“Right now, the U.S. is sitting on a pile of around 200,000 bitcoin that the U.S. owns in its Treasury, and so that is something that is clearly, now essentially in the U.S.’s possession,” Yadav said.

Another possible pathway could involve the U.S. going into the market and directly purchasing more assets, like bitcoin or the others Trump highlighted. The U.S. would be an active participant in the crypto market, largely as a buyer, Yadav noted, opening a host of questions over how the government’s role would be managed.

Crypto observers predict the reserve would likely resemble those already in place for assets like gold.

A gold reserve is the fund of gold held by a national government or bank and can be used as economic security against inflation or as leverage in times of uncertainty. The same can be said for an oil stockpile, typically used by governments as a buffer against energy or economic disruptions.

What’s the purpose of a crypto reserve?

The purpose of a crypto reserve, like other national stockpiles, has been framed to preserve the wealth of countries and to serve as a hedge against economic uncertainty, explained JP Richardson, the CEO of bitcoin and crypto wallet Exodus.

Proponents of a reserve believe it will reinforce the growing value of digital currencies as the industry seeks to solidify crypto as long-term assets. In doing so, supporters believe it could eventually reduce the national debt.

“The theory is that this is going to provide a source of value for the future of an asset that's going to grow in value,” Yadav explained. “This will mean that the U.S. will hold on to an appreciating asset, which over time, will mean that maybe it will get enough value that it can start even to think about paying off its debt over time.”

By assuming crypto assets will continue growing in value and eventually help pay down national debt, supporters of the reserve argue taxpayers could benefit from the creation as well.

Proponents believe “taxpayers can benefit because the future value will be far greater than what they’re paying for right now and so that will eventually help the tax base,” Yadav said.

How does a reserve benefit the crypto industry?

Some proponents believe the reserve may add more legitimacy to crypto as a diversification strategy as the industry tries to solidify its standing in traditional market structures.

“If the United States of America has decided it makes sense to hold crypto, that offers massive legitimacy for the American retail investor,” Kirkpatrick Bos said.

In turn, more Americans may be open to purchasing crypto and ultimately boost the price of crypto assets.

The new details about the reserve alone have stoked excitement in the market, hinting at the monetary benefits the industry could see in the future.

Prior to Sunday’s announcement, the crypto market was showing signs of cooling off following a months-long rally after Trump’s reelection. Bitcoin hit a three-month low Friday but spiked back up to $94,000 in the hours after Trump’s posts on Sunday.

Does Trump have the authority to create a crypto reserve?

Trump has not made clear whether he plans to push for the creation of the reserve through an executive order or through Congress.

Should he pursue the executive order route, he risks facing legal challenges over it, crypto observers suggested.

“He can make an executive order saying anything he wants, and it stands until it’s revoked, it’s expired, it’s canceled, it’s challenged in court,” Kirkpatrick Bos said. “So although they [executive orders] essentially function as law, they will be struck down if the courts determine that the president has overstepped his authority.”

A reserve would have major economic implications, which could lead to complications as the president does not necessarily have the authority to modify the federal budget via an executive order.

A more guaranteed way, observers said, is through Congress and codifying the reserve into law.

Crypto advocate Sen. Cynthia Lummis (R-Wyo.) introduced a bill last year proposing the creation of a strategic bitcoin reserve in which the U.S. would purchase a large amount of the cryptocurrency and hold it as a reserve.

She said earlier this year she plans to reintroduce the bill in the upcoming session.

What are the reactions to the announcement?

Trump promised a crypto stockpile on the campaign trail last summer, making his weekend announcement not a large surprise. The mention of specific coins, however, stirred up skepticism in the industry.

While much of the industry has expressed support for a crypto reserve of sorts, some were surprised to see assets like XRP and Solana mentioned as part of the reserve, rather than just bitcoin.

“I have nothing against XRP, SOL, or ADA but I do not think they are suitable for a Strategic Reserve. Only one digital asset in the world right now meets the bar and that digital asset is bitcoin,” Tyler Winklevoss, co-founder of cryptocurrency exchange Gemini, posted on the social platform X.

“Many of these assets are listed for trading on @Gemini and meet our rigorous listing policy criteria, but with respect to a Strategic Reserve it is another standard. An asset needs to be hard money that is a proven store of value like gold.”

Richardson echoed this sentiment, writing on X, “This is incredible news for Exodus and our business. This is terrible news for the U.S.”

“Americans deserve a strategist reserve with bitcoin only,” he added.

George Selgin, director emeritus for the Center for Monetary and Financial Alternatives at the CATO Institute, also pushed back on the prospect last month.

“The claim that a Strategic Bitcoin Reserve would function like the official U.S. gold stockpile is a great argument against creating an SBR, for as anyone who understands how the U. S. monetary system has worked since 1973 can tell you, all that gold serves no purpose at all,” he wrote on X.

Meanwhile, concerns have also been raised over the drastic volatility of digital assets and the implications it could have for the U.S. government.

“That volatility risks an enormous outcry directed at crypto if prices were to go down because the stakes are much higher of course when we’re talking about America versus crypto companies,” Kirkpatrick Bos said.

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