 "Explained: Donald Trump's Crypto Strategic Reserve move & its implications")
US President Donald Trump has announced the establishment of a United States ‘Crypto Strategic Reserve’, incorporating major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). The move aims to position the US at the forefront of the burgeoning digital asset industry, and comes days ahead of the White House Crypto Summit on Friday.
In a series of posts on Truth Social on Sunday, March 2, Trump said, “A US 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, and ADA. I will make sure the US is the Crypto Capital of the World. We are MAKING AMERICA GREAT AGAIN!”
In another post, he said: “Obviously, BTC and ETH, as other valuable Cryptocurrencies, will be at the heart of the Reserve. I also love Bitcoin and Ethereum.”
His announcement contributed to a $300 billion rally in the global crypto market. Bitcoin, the leading cryptocurrency by market capitalisation, surged by over 10 per cent, reaching a peak of $94,821. Ethereum experienced a 12 per cent rise, while XRP, Solana, and Cardano saw even more substantial gains of 30 per cent, 20 per cent, and over 50 per cent, respectively, according to data shared by MarketWatch.
Why Trump loves crypto
In his second term, Trump’s crypto policy has seen a departure from his previous regulatory approach. Previously, he had labelled cryptocurrencies as a ‘scam’ and advocated for heavy regulation to prevent competition with the US dollar. However, during his 2024 election campaign, Trump garnered significant support from the crypto industry, pledging to foster a more favourable environment for digital assets.
The previous Joe Biden administration adopted a more cautious and regulatory-focused approach toward cryptocurrencies. For instance, in May 2023, the administration proposed a 30 per cent tax on cryptocurrency miners’ energy costs, aiming to address environmental concerns associated with mining activities. Additionally, the Securities and Exchange Commission (SEC) under Biden’s tenure pursued numerous enforcement actions against major crypto entities, reflecting a stringent regulatory stance.
Trump’s current policies, including the nomination of crypto supporter Paul Atkins to replace Gary Gensler as SEC chairman, indicate a more favourable outlook toward the crypto industry. His administration has since withdrawn investigations into several crypto companies and dismissed a lawsuit against Coinbase, the largest crypto exchange in the US.
In January this year, Donald Trump signed an executive order directing the creation of a Presidential Working Group on Digital Asset Markets to solidify the United States’ leadership in digital financial technology and to establish regulatory clarity in the rapidly evolving digital asset sector.
What US Strategic Crypto Reserve is expected to do
Trump’s idea behind establishing the Crypto Strategic Reserve is to enhance the legitimacy and acceptance of cryptocurrencies, potentially leading to increased institutional adoption and integration into traditional financial systems.
Besides, this initiative could influence regulatory approaches to digital assets. By holding a diversified portfolio of cryptocurrencies, the US government might be better positioned to influence global crypto regulations and standards. This move could also prompt other nations to consider similar reserves, potentially leading to a more coordinated international regulatory environment.
While the announcement has been met with optimism by the crypto market, several operational aspects remain unclear. The mechanisms for acquiring and managing the cryptocurrencies within the reserve have yet to be detailed.
The US government currently holds an estimated $19 billion in Bitcoin, primarily acquired through seizures linked to criminal cases. It remains to be seen whether the reserve will solely comprise these assets or if additional acquisitions are planned.