The Delayed Establishment of a US Bitcoin Reserve

The crypto industry was thrilled when President Donald Trump instructed his administration to explore setting aside cryptocurrencies as a long-term investment for the US government. However, progress has been slow, and officials behind the effort suggest that the wait may be considerable. Trump's directive, issued in March, instructed the Treasury Department to develop a plan for establishing a Strategic Bitcoin Reserve and a US Digital Asset Stockpile by a now-expired deadline. Although the administration was expected to have a plan in place by now, it has yet to be revealed. Bo Hines, one of Trump's chief crypto advisers, noted that there is no requirement for the report to be made public, but the administration may choose to do so at some point. Hines did provide an update on the government-wide audit aimed at determining the crypto assets held by various federal agencies, including the US Marshals Service. He stated that the agencies have reported their holdings, and the process of establishing the reserve and its infrastructure is now underway. The executive order from Trump marked a significant shift in the government's stance on cryptocurrency, which had previously been met with resistance due to concerns about risk and recklessness. The price of BTC has risen 25% since the order was issued. Industry experts, such as Hailey Miller, director of government relations at the Digital Chamber's Digital Power Network, are urging the administration to move from vision to execution. Senator Cynthia Lummis has taken the lead in the Senate with her Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act, which aims to transform Trump's executive action into law. The act seeks to establish a bitcoin reserve, which would make the US an outsized bitcoin investor. However, Lummis and other supporters of the reserve acknowledge that there are more pressing priorities in crypto legislation, such as setting rules for markets and stablecoins. Representative Nick Begich is pushing matching legislation in the House of Representatives, but the timeline for consideration is uncertain. The market structure and stablecoin bills are on uncertain timelines, and it is unclear when lawmakers will have a window to consider the reserves. Despite the challenges, Begich remains hopeful that the focus will turn to the BITCOIN Act once the other crypto efforts are completed. The administration is exploring ways to purchase digital assets without using new taxpayer money, and Hines stated that federal officials are working on multiple ideas to accumulate 'digital gold.' The government is estimated to have around 200,000 bitcoin on hand, and the BITCOIN Act would seek to buy about 5% of the global bitcoin supply over a five-year period. The act would attempt to unlock novel funding approaches to avoid hitting taxpayers. Begich believes that bitcoin is not just a niche financial instrument but a mainstay that the government needs to embrace. One of the conceptual challenges of the digital 'strategic reserve' is that it is not meant to be a traditional reserve, as it is not intended to be released when the nation has a special need. Instead, it is meant to be a long-term investment. As the federal government continues its work, states such as Texas are already building their own stockpiles, having jumped ahead of their federal counterparts in setting up state-based reserves.