Unpacking the Debate Over a Strategic Bitcoin Reserve

During his first week in office, President Donald Trump signed an executive order dubbed “Strengthening American Leadership in Digital Financial Technology.” The wide-ranging directive aims to promote digital assets in the US, but no part drew more attention than the edict to create a working group to study the feasibility of a “national digital asset stockpile.”

Some in the crypto community have argued a reserve or stockpile should include bitcoin only. Another vocal contingent have said the stockpile should include bitcoin AND US-based cryptocurrencies such as XRP, Solana, and others. And a smaller but vocal group has expressed skepticism that a US-sanctioned crypto buying program is necessary at all.

While the working group led by Trump-appointed crypto and AI czar David Sacks considers its options, let’s review how a crypto reserve could work and dive deeper into an issue dividing the crypto community.

Can the US Government Set Up a Bitcoin Reserve?

Federal Reserve chair Jerome Powell said the agency isn’t permitted to buy bitcoin. But that could soon change.

Senator Cynthia Lummis (R-Wyo) recently introduced a bill that would instruct the US Treasury to purchase 200,000 bitcoin annually over a five-year period. The goal is to purchase a total of 1 million tokens, though it’s unclear if the current total held by the government would count toward that number.

Meanwhile, more than 20 US states have recently proposed legislation to set up a strategic crypto reserve. Utah is the closest to enacting legislation to set up a buying program, with Wyoming, Massachusetts, Illinois, Pennsylvania and others also currently weighing whether to jump in. These state-led programs will likely operate independently of a bitcoin reserve or strategic national stockpile.

The US government already owns approximately 200,000 bitcoin, worth about $18 billion based on current prices. But this stockpile wasn’t part of a buying program. Federal enforcement agencies have seized it over the years from a range of bad actors including Silk Road, the now defunct online seller of drugs and other illegal items.

The Great Divide: Bitcoin Reserve vs. Strategic Crypto Stockpile

With crypto still a new asset class compared to fiat currencies, some feel bitcoin prices are too volatile for the government to leverage it through a strategic reserve. But the bigger divide is in the crypto community.

Bitcoin maximalists are adamant the US stockpile should only include bitcoin, arguing the largest cryptocurrency by market cap holds the most strategic value and can still outperform any challengers.

Conversely, proponents of a diversified “America-first” stockpile advocate for a mix of U.S.-based cryptocurrencies. In their view, the aforementioned state-led reserve programs should focus exclusively on bitcoin, and that it benefits the US to have a stockpile of different cryptocurrencies at the federal level.

Among the suggested additions is Ripple’s XRP, a payments-focused token that has risen to the fourth largest cryptocurrency by market capitalization. Ripple CEO Brad Garlinghouse has been increasingly visible in DC, posing for a photo recently after meeting with President Trump. In February, Garlinghouse joined the White House’s Crypto Advisory Council. And Trump recently posted about XRP on Truth Social, fueling positive market sentiment.

XRP is a payments-focused token that has leaned hard into tokenization and recently released its own stablecoin, making it an attractive candidate to join the stockpile as the US vies to keep the dollar dominant.

Other coins that could be included as part of a digital asset stockpile include Solana, and USDC, but it will ultimately fall on lawmakers and the new working group led by Sacks to decide which coins end up under US government control.

The Argument Against A Crypto Reserve

Not all are in favor of a bitcoin reserve or diversified strategic stockpile. Prominent crypto-focused journalist Nic Carter recently published a lengthy op-ed in Bitcoin Magazine where he argued a bitcoin reserve would undermine the strength of the US dollar and potentially throw global markets into chaos.

Among his arguments: Carter said there’s no use case for deploying the crypto. Would it be used to eventually pay down the ballooning national debt? Would it truly help hedge against inflationary pressures?

Carter also argued the increase in prices could disproportionately benefit wealthy HODLers compared to retail investors, although there would likely be some positive downstream impact if prices surge.

A recent Forbes column from David Birch also questioned the utility of a strategic reserve, noting that even the US gold reserves don’t have much use anymore and neither would a crypto reserve.

“One of their arguments in favor of such action is that bitcoin is a form of digital gold, and since the government holds actual gold then it should sell some of it and replace it with the modern alternative.But that gold has little utility either. Gold reserves (about a sixth of global reserve assets) are no longer used to settle international accounts but are there as a hedge against exchange rate risk, but the fact is that much of the world’s official gold reserves are held for no better reason than sheer inertia.” — David Birch, Forbes

As the pro-crypto Trump administration enters its second month, the future of a national digital asset reserve is murky. The only certainty is that supporters on one side of the argument are likely to come away disappointed—while their opponents will be thrilled when a decision is made.