The establishment of a US bitcoin reserve hinges on the interpretation of the term 'reserve'. Would the government merely halt the sale of its existing bitcoin holdings, as promised by former President Donald Trump, or would it actively acquire more, as advocated by Senator Cynthia Lummis and Trump ally Robert F.
Kennedy? The government currently possesses over 208,000 bitcoin, valued at more than $19 billion, according to Arkham Intelligence. Historically, these holdings were acquired through confiscations related to criminal activities and were sold at auctions. However, Trump announced in July that his administration would retain 100% of the bitcoin it currently holds or acquires in the future.
Implementing this policy is not straightforward, as it would require coordination between various government agencies, including the Department of Justice, the US Marshals Services, and the US Treasury. Perianne Boring, founder and CEO of the Digital Chamber, noted that there is no established method for implementing this policy, and the procedure would likely involve inter-agency coordination. 'We don't have anything in writing, right?
We're just kind of going by a speech that was rather generic,' Boring stated. Moish Peltz, a partner at Falcon, Rappaport and Berkman, pointed out that the rules surrounding seized bitcoin might change on a department-by-department basis and vary depending on how the bitcoin was seized. 'Some portion of the seized bitcoin might need an act of Congress, but not necessarily,' he said. The process of establishing a strategic reserve could be gradual, with the government's existing experience with seizure and custody of large amounts of bitcoin demonstrating competency and making it easy to imagine a relatively low level of difficulty in establishing a reserve.
Over time, this could evolve into a more significant stance as regulatory clarity improves, legislation is enacted, and the government develops a more comprehensive digital asset strategy. Senator Lummis has proposed a more proactive approach, advocating for the US to sell a portion of its gold reserves and purchase 1 million bitcoin. At current prices, this would entail spending a minimum of $90 billion.
An executive order could potentially initiate the process, but substantial financial commitments usually require an act of Congress to allocate funds and create a legal framework. Boring was optimistic about the bill passing, while Nic Carter, a partner at Castle Island Ventures, was less certain, noting that Congressional priorities when it comes to crypto involve passing a stablecoin bill and investigating Operation Choke Point 2.0. Zack Shapiro, head of policy at the Bitcoin Policy Institute, argued in favor of a novel theory that the Treasury has the authority to acquire bitcoin through the Exchange Stabilization Fund (ESF) by purchasing bitcoin-denominated debt instruments.