Back in July, then-candidate Donald Trump promised to stop selling seized bitcoin. Now, experts are saying that the incoming president might need some help from Congress to set up a proper strategic reserve. With Republicans gaining majorities in Congress, creating a bitcoin reserve may not be at the top of their agenda.
So, will the U.S. government actually create a bitcoin (BTC) reserve? It seems to depend on what you mean by “reserve.” Will the government just stop selling the bitcoin it already has, as Trump mentioned in his Nashville speech? Or will it actively buy bitcoin, like Senator Cynthia Lummis and Trump ally Robert F. Kennedy want?
According to Arkham Intelligence, the government currently holds 208,109 bitcoin, worth over $19 billion. This bitcoin was obtained over time through confiscations related to criminal activities. Traditionally, the government has sold this seized bitcoin at auctions. However, Trump announced in July that under his administration, the government would keep 100% of all bitcoin it holds or acquires in the future.
It sounds simple, right? But there’s no established way to implement this policy. It would likely require coordination among various government agencies, such as the Department of Justice, the U.S. Marshals Service, and the U.S. Treasury.
“We don’t have anything in writing,” said Perianne Boring, founder and CEO of The Digital Chamber, a crypto advocacy group. “We’re relying on a speech that was pretty vague. Can you just move money between federal agencies like that? I’m not sure.”
Boring added, “If you’re moving bitcoin from the Department of Justice to the Treasury as a strategic stockpile, that probably needs an act of Congress. But again, I’m not entirely sure what Trump can do with his executive powers.”
Moish Peltz, a partner at Falcon, Rappaport and Berkman, told CoinDesk that the rules about seized bitcoin might vary from one department to another and depend on how the bitcoin was seized. “Some of the seized bitcoin might need congressional approval, but not necessarily,” he said.
Moreover, the process could take time. “The government’s existing experience with seizing and managing large amounts of bitcoin shows it can handle this. It’s not too complicated to imagine setting up a strategic reserve,” Peltz explained. “Over time, this could develop into a bigger initiative as regulations become clearer and laws are enacted.”
Keeping seized bitcoin is one idea for the reserve. But Senator Lummis has proposed a more active approach in a new bill: selling off part of the U.S. gold reserves to buy 1 million bitcoin. At current prices, that would mean spending at least $90 billion, though the government might face challenges if the bill ever passes.
Peltz noted, “An executive order could start the process, but major financial commitments usually need congressional action to allocate funds and create a legal framework.”
Boring is optimistic about the bill’s chances. With Republicans soon in control of the House, Senate, and White House, she said, “It’s absolutely possible to get it done,” though she also mentioned it’s unlikely to happen in the first 100 days of the new Congress.
On the flip side, Nic Carter, a partner at Castle Island Ventures, a blockchain-focused venture fund, isn’t so sure. He pointed out that congressional priorities right now include passing a stablecoin bill and investigating Operation Choke Point 2.0. “The strategic reserve didn’t come up in any of the conversations I had,” he posted.
Could there be a legal loophole that lets the government buy bitcoin without congressional approval? Maybe. Zack Shapiro, head of policy at the Bitcoin Policy Institute, recently argued for a new and untested theory: that the Treasury could acquire bitcoin through the Exchange Stabilization Fund (ESF) by buying bitcoin-denominated debt instruments.
“When the debt matures, the counterparty would repay the obligation in bitcoin, transferring the cryptocurrency to the Treasury,” Shapiro explained. “This way, the Treasury can acquire bitcoin without directly buying it on the open market, avoiding potential market disruptions.”
Currently, bettors on Polymarket give a 30% chance that the government will hold bitcoin reserves between January and April 2025.