Trump signs executive order, holds Bitcoin as a reserve asset
US President Donald Trump has signed an executive order to establish a strategic reserve of cryptocurrencies, using tokens already owned by the government, disappointing some market participants who had hoped for the purchase of new tokens.
The announcement, made ahead of a meeting with crypto executives on Friday, caused bitcoin's price to drop by 5% to $85,000, although it later recovered to $89,200 in early European trading.
The "Strategic Bitcoin Reserve" will be capitalized with bitcoin seized through criminal or civil asset forfeiture proceedings, according to White House crypto czar David Sacks.
The order also leaves open the possibility for the government to buy additional bitcoin in the future, with US commerce and treasury secretaries authorized to develop budget-neutral strategies to acquire more, provided they don't add extra costs for American taxpayers.
Andrew O'Neill, digital assets managing director at S&P Global Ratings, noted that while the order symbolizes Bitcoin's formal recognition as a reserve asset, it "marks the first time Bitcoin is formally recognized as a reserve asset of the United States government," but the reserve will only include bitcoin already owned by the US government. He added there was no indication of how much or when additional bitcoin might be acquired.
Trump's earlier promises of a strategic reserve and industry-friendly regulation had led to a surge in bitcoin's value, reaching a record high of $109,071.86 in January.
However, some, like Charles Edwards, founder of Capriole Investments, expressed disappointment, calling the announcement "just a fancy title for Bitcoin holdings that already existed with the government."
Alongside the Bitcoin Reserve, the US will also create a "US Digital Asset Stockpile," which will include tokens other than bitcoin but will not be added to beyond those obtained through forfeiture.
At the same time, Trump named five digital assets—bitcoin, ether, XRP, solana, and cardano—as candidates for inclusion in the government reserve, causing a surge in the market value of these tokens. However, attendees at the White House crypto summit on Friday still expect Trump to formalize his plans.
Sacks also outlined that the reserve would not involve selling the bitcoin but would treat it as a store of value, similar to a "digital Fort Knox" for cryptocurrency. Despite some controversy, proponents of the reserve argue it would allow taxpayers to benefit from crypto's price growth.
The US government is estimated to own about 200,000 bitcoin, with Sacks suggesting that the premature sale of the cryptocurrency has cost American taxpayers $17 billion.
However, the basis for this estimate remains unclear. Trump's crypto support has also raised concerns due to his family's involvement in launching meme coins and his stake in a crypto platform, although aides have said he has handed over control of his business ventures to outside ethics lawyers.
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