MOOSPEAK: MAR07.2025
The Bitcoin Reserve & Digital Asset Stockpile
President Trump established the Strategic Bitcoin Reserve and US Digital Stockpile by executive order this week (March 6th). The order notes that the supply of Bitcoin is capped at 21 million “coins” and that the block chain system underlying it has never been hacked, and as a result of that scarcity and security, Bitcoin (BTC) is often referred to as “digital gold”. It goes on to acknowledge that given the fixed supply of BTC, there is a strategic advantage to being among the first nations to create a strategic bitcoin reserve. Moreover, since the United States Government already holds a significant amount of BTC but has not implemented a policy to maximize BTC’s strategic position as a unique store of value in the global financial system, it is worth our while to “harness, not limit, the power of digital assets for our prosperity”.
The order then provides for a Bitcoin (BTC) Strategic Reserve, and for a separate Digital Asset Stockpile comprised of all non-BTC digital assets. The Treasury has 60 days to provide a plan to establish, administer and manage the custodial accounts, and all government agencies will have 30 days to transfer any Bitcoin and/or Digital Assets to the Treasury, except those applicable by law to the cost of seizure. Agencies are basically precluded from selling or otherwise disposing of any digital assets except through the Treasury, pursuant to a court order, or in cases where the Attorney General determines they must be applied to victims of crime or to law enforcement expense.
Current Treasury BTC holdings are around 200,000 coins, valued around $17B. The Secretary of the Treasury and the Secretary of Commerce are to develop budget neutral strategies for acquiring additional Bitcoin in a manner that doesn’t impose incremental costs on United States taxpayers. However, the US Government won’t acquire additional non-BTC digital assets other than in connection with criminal or civil asset forfeiture proceedings or in satisfaction of any civil money penalty imposed by any agency without further executive or legislative action.
Government BTC deposited into the Strategic Bitcoin Reserve shall not be sold and shall be maintained as reserve assets of the United States. As for non-Bitcoin assets, the Secretary of the Treasury shall determine strategies for responsible stewardship of the US Digital Asset Stockpile in accordance with applicable law.
This week’s executive order offers little new, but it does tell us that this government intends to codify the manner in which it deals with digital assets rather than continuing to fly (erratically) by the seat of its regulatory pants. It will, however, be six months before that new framework gets down to specifics.
For the moment it doesn’t appear that government plans to intervene in the BTC market in ways that will affect Bitcoin’s value. Owners of bitcoin were hoping new Trump government demand would spike the price. They bid it up to $109.3K on inauguration day, but the order suggests that is not to be. Rather the objective of the BTC Reserve seems to be to lend stability to the asset so that it may eventually become more widely accepted as a global payment mechanism. It is also to keep the United States in firm control of the block chain technology behind it and to make sure the US Dollar remains the preeminent currency in global trade. In particular, the BRICS nations are interested in creating a new currency to compete with the US dollar and recently announced plans for a blockchain-based payment system.
As a result, the price of BTC has fallen to $82.8B as of March 9, right at its intermediate term 200-day moving average. For those who are keeping score, that is a 24% decline in value in what a lot of folks were touting as a “sure thing” just seven weeks ago. (So much for government lending BTC stability in round one.)
Maybe it’s just me, but I get nervous every time I hear the words “Hi, we’re from the government and we’re here to help.”
As a payment mechanism Bitcoin poses immense but not insurmountable problems for government. Notions of anonymity, invisibility and inaccessibility often associated with Bitcoin are obviously in direct conflict with the law enforcement and tax collection functions required of government, but such notions about Bitcoin are not entirely accurate. Government can and has found ways around them. Technology is like that.
Block Chain technology could be a Libertarian savior, offering personal banking and financial freedom and increased privacy to all, as long as the second part of the Libertarian credo “do no harm to others” is also assured. Without that guard rail, evil-doers could run amok, and chaos could reign unimpeded. Or so we are told.
NEXT WEEK: Bitcoin: Myths and Potential