Trump is Steadfast on Implementing a Strategic Bitcoin Reserve, Experts Explain How He Might Do It

U.S. President Donald Trump's proposal to establish a U.S. strategic Bitcoin (BTC) reserve has fueled high expectations, though experts caution that the plan could face hurdles related to legislation, funding, and Bitcoin's inherent volatility.

Following Trump's announcement in Dec. 2024, Bitcoin's price surged to a then all-time high of $108,000, driven by widespread pro-crypto sentiment. However, the cryptocurrency experienced a correction, retreating to approximately $93,000 amid the Federal Reserve's hawkish monetary stance and the release of recent macroeconomic data. Since then, Bitcoin rallied to a new all-time high on Inauguration Day, reaching $108,500. Currently, BTC is trading at around $103,000, according to CoinGecko.

While Trump has not detailed how he plans to implement this initiative, his remarks emphasize the growing adoption of BTC by governments and large institutions. This signals a border shift toward digital currencies and the integration of blockchain technology with traditional finance.

How it could happen

A Bitcoin reserve refers to an entity holding a strategic stockpile of BTC, similar to how countries maintain gold and U.S. dollar reserves. These reserves could serve as a hedge against inflation, support monetary policy, and enhance national financial security, experts say. However, there are various approaches Trump could take to implement this plan.

The most likely way to establish a Bitcoin reserve would be for former President Trump to collaborate with Congress to pass legislation formalizing its creation, according to Zack Shapiro, managing partner at Rains Law and head of policy at the Bitcoin Policy Institute. Such legislation could authorize the U.S. Treasury or Federal Reserve to oversee the reserve, including guidelines for how Bitcoin is purchased, stored, and accessed.

Shapiro referenced a bill proposed by Republican Sen. Cynthia Lummis of Wyoming. The bill envisions the U.S. acquiring 1 million Bitcoin—approximately 5% of the total supply—over time, with the intent of holding it for at least 20 years. To finance the purchase, Lummis suggested revaluing about $11 billion worth of gold certificates currently held on the Federal Reserve’s balance sheet.

“The bill by Senator Lummis, called the Bitcoin Act, would have to be passed through the House and the Senate and then signed into law by President Trump. So it's not something that he could do unilaterally,” Shapiro said, noting that a timeline would depend on the priorities of Congress.

“It could happen relatively quickly, but the sort of X Factor is how much of an appetite is there in Congress for digital asset legislation, and then how high of a priority is the SBR (strategic bitcoin reserve) relative to the other crypto legislative priorities,” Shapiro said, emphasizing that it’s not likely to happen on day one of Trump’s term.

Executive order

Another path to a strategic Bitcoin reserve could be to issue an executive order similar to the 1933 mandate requiring U.S. citizens to surrender gold to stabilize the economy, according to Tim Kravchunovsky, founder and CEO of Chirp.

However, Kravchunovsky cautioned that such a reserve would require significant funding and may necessitate congressional approval and legislative action, similar to the Gold Reserve Act of 1934, which formalized government control over gold reserves.

He also suggested that Bitcoin seized by the Department of Justice (DoJ) could be used to build the reserve, though this would require a policy change to prevent seized BTC from being sold off, as is the current practice.

Currently, the government holds nearly $22 billion worth of Bitcoin, which it has obtained through legal seizures, according to crypto tracking firm Arkham Intelligence. The U.S. is the largest holder of Bitcoin globally, followed by China with 194,000 BTC valued at $20 billion. The United Kingdom ranks third with 61,000 BTC, valued at around $6 billion, according to BitBo.

Trump has previously expressed interest in holding Bitcoin.

"For too long, our government has violated the cardinal rule that every Bitcoiner knows by heart: Never sell your Bitcoin," Trump said in July 2024.

“In the past, the government has held on to assets for strategic or operational purposes—this has included land, vehicles, and foreign currency, so really this wouldn’t be any different,” Kravchunovsky said.

The pros

Supporters argue that a BTC reserve could provide substantial benefits for the U.S. financial system. Kravchunovsky believes that Bitcoin could help address the nation’s mounting debt, calling it one of the few avenues available to tackle this issue.

"As a store of value, BTC has the greatest appreciation potential of all major investment assets and can also protect assets from inflation risk," he said.

Previously, Bitcoin’s volatility was seen as a drawback, but proponents believe its status as a national reserve currency would stabilize the asset, diminishing volatility over time.

"Governments making Bitcoin a reserve currency would significantly reduce the volatility—it would only remain a risk for those buying at the top for short-term investment," Kravchunovsky added.

Lee Bratcher, President of the Texas Blockchain Council, emphasized three key advantages of using Bitcoin as a national reserve: Its decentralized nature, scarcity, and liquidity.

“A nation with Bitcoin in their reserves has full control over the asset without third-party influence, unlike foreign-held gold or currency reserves,” Bratcher explained. “And like gold, Bitcoin is considered a store of value.”

He noted that Bitcoin has the added advantage of a predictable issuance schedule and finite supply.

“Since Bitcoin can be traded globally 24/7, nations have more flexibility to liquidate or acquire reserves quickly, making it an ideal asset for a national reserve,” Bratcher said.

The cons

Despite the apparent advantages, not all experts are in favor of a strategic BTC proposal. David Materazzi, CEO of Galileo FX cautioned against governments betting taxpayer money on speculative assets.

“While Bitcoin could generate outsized returns, the public sector’s role is to create stability, not chase profits,” he said. “Private investors can afford bold moves like this; governments should stick to predictable strategies.”

This is especially true as the regulatory landscape for Bitcoin and cryptocurrencies is still evolving.

Alexandr Sharilov, CEO of CoinDataFlow, echoed concerns about the potential risks, warning that a government-backed BTC reserve could strain traditional financial systems. Sharilov noted that with assets like Bitcoin, which are highly volatile, the reserve could lose significant value in a short time due to sudden price swings.

“If the price of Bitcoin falls, it could trigger a digital arms race and disrupt the global economy,” Sharilov said. “Any carelessness and wrong decision could have significant consequences.”

Ripple effect

Metaplanet CEO Simon Gerovich suggested in an interview at MicroStrategy CEO Michael Saylor’s New Year’s Eve party that Trump’s adoption of BTC as a strategic reserve could have a ripple effect internationally.

“If President Trump does adopt it as a strategic reserve, then Japan and many other countries in Asia will do the same,” Gerovich said.

This sentiment is also reflected in legislative initiatives across several US states, where lawmakers have introduced bills following Trump’s proposal. On Dec. 17, Ohio State Representative Derek Merrin introduced House Bill 703, which aims to establish a Bitcoin (BTC) reserve for the state.

“The US dollar is being rapidly devalued and our State Treasurer should have the authority and flexibility to invest in Bitcoin when determining proper asset allocation,” Merrin said at the time. “Ohio must embrace technology and protect tax dollars from eroding.”

Texas also announced a similar initiative, proposing the creation of a Bitcoin reserve funded through donations, with a mandated five-year holding period. Meanwhile, Florida put forward a proposal to leverage its nearly $1.9 trillion pension fund to invest in Bitcoin, signaling growing interest in integrating cryptocurrency into state financial strategies. States like Oklahoma and Pennsylvania have also expressed interest in creating SBRs.

Dennis Porter, CEO and co-founder of the Satoshi Action Fund, revealed earlier this year that up to 20 SBR bills are set to be introduced at the state level in the US in 2025.