President Donald Trump made a historic move on Thursday by signing an executive order that establishes a government reserve of bitcoin. This is a major milestone for the cryptocurrency as it takes a step towards potential mainstream acceptance.
Under this new order, the U.S. government will keep the estimated 200,000 bitcoins that it has seized in criminal and civil proceedings, as confirmed by “crypto czar” David Sacks. He also stated that the government will not sell any of the deposited bitcoins and will use it as a store of value. This reserve will act as a digital Fort Knox for the digital gold, as bitcoin is often referred to.
The executive order mandates a full accounting of the government’s bitcoin holdings, which Sacks claims have never been fully audited. He further stated that the U.S. government has previously sold off approximately 195,000 bitcoins over the last decade for $366 million. However, if the government had held onto these bitcoins, they would be worth a staggering $17 billion today.
According to Sacks, the order allows for the Treasury and Commerce departments to develop budget-neutral strategies for acquiring additional bitcoins. This is in line with one of Trump’s promises on the campaign trail last year – to establish a bitcoin reserve. He has also actively pushed for legislation that favors the crypto industry and his administration has dropped enforcement actions against major crypto companies.
When Trump was running for president, he was a skeptic of bitcoin and even called it a “scam” a few years ago. However, his stance seems to have changed and he has embraced digital currencies, earning him the unofficial title of “crypto president.” This has not only helped the crypto industry but also benefitted himself and his family financially. Wealthy players in the industry, who felt targeted by the Biden administration, heavily supported Trump during last year’s election.
Bitcoin, created in response to the 2008 financial crisis by an anonymous person or persons, is the oldest and most popular cryptocurrency today. It has evolved from an experimental concept by libertarian cryptography enthusiasts to an asset with a market cap of $1.7 trillion. While it hasn’t gained widespread acceptance as a means of payment for everyday transactions, bitcoin has become popular as a store of value that is not controlled by banks, governments, or other powerful entities.
Bitcoin’s supply is limited to 21 million coins, making it a scarce asset that can serve as a hedge against inflation. Some advocates of a strategic bitcoin reserve argue that it could even help pay off the U.S. national debt in the future. Critics have always argued that bitcoin has no inherent value, but it has consistently defied their doubts with impressive price increases.
After Trump’s victory in last year’s election, crypto prices soared. In fact, when the price of bitcoin crossed $100,000 in early December, Trump took credit and posted “YOU’RE WELCOME!!!” on social media. However, prices have since cooled off and the executive order did not result in an immediate price spike for bitcoin, which was trading around $86,000 shortly after the announcement.
In addition to establishing a bitcoin reserve, the executive order also creates a “U.S. Digital Asset Stockpile,” where the government will hold other seized cryptocurrencies besides bitcoin. This decision by Trump has had a positive impact on lesser-known cryptocurrencies XRP, solana, and cardano, as their prices briefly surged after his surprise announcement on Sunday.
Overall, Trump’s executive order is a significant step towards mainstream acceptance of bitcoin and other cryptocurrencies. It not only showcases their potential as a store of value but also recognizes their importance in the global economy. As the “crypto president,” Trump’s support for the industry has been instrumental in its growth and will continue to have a significant impact in the future.
