Trump Establishes National Cryptocurrency Reserve, Sparks Market Volatility

President Donald Trump has signed an executive order establishing a strategic cryptocurrency reserve for the United States, a move intended to position the nation as a leader in the digital asset space. The reserve, announced ahead of a White House cryptocurrency summit, will be stocked with forfeited digital assets, primarily Bitcoin, according to White House crypto advisor David Sacks.

The initiative, framed as a “digital Fort Knox,” will see the U.S. government hold seized cryptocurrencies as a long-term store of value, with no plans for immediate sale. This strategy aims to capitalize on potential future price appreciation, mirroring the concept of traditional strategic reserves like gold or oil.

“The U.S. will not sell any bitcoin deposited into the Reserve,” Sacks stated on social media platform X, emphasizing the reserve’s role as a “store of value.”

The announcement comes after Trump’s earlier revelation of five cryptocurrencies he envisioned for the reserve: Bitcoin, Ethereum, XRP, Solana, and Cardano. This list triggered a significant surge in the market value of these assets.

However, the lack of clarity on how the reserve will operate and its direct benefits to taxpayers has generated mixed reactions. Critics, including Charles Edwards, founder of Capriole Investments, expressed disappointment, labeling the initiative a “pig in lipstick,” suggesting it merely formalizes existing government holdings without active market participation.

“No active buying means this is just a fancy title for Bitcoin holdings that already existed with the Govt,” Edwards wrote on X.

The executive order directs the Treasury and Commerce departments to develop “budget-neutral strategies” for acquiring additional Bitcoin, ensuring no “incremental costs” to taxpayers. Sacks estimated the U.S. government currently holds approximately 200,000 Bitcoin, highlighting the potential value of these assets.

The move has also raised ethical concerns, given Trump’s personal ties to the cryptocurrency industry, including family involvement in meme coin ventures and a stake in a crypto platform. Aides maintain that Trump has relinquished control of his business interests, subject to review by ethics lawyers.

Despite the administration’s claims of a “cost-free” initiative, the announcement triggered a brief market downturn, with Bitcoin prices dipping over 5% before recovering slightly. This volatility reflects the market’s uncertainty about the reserve’s long-term impact.

The initiative draws comparisons to other nations’ cryptocurrency strategies, notably El Salvador’s adoption of Bitcoin as legal tender and the ongoing discussions in countries like Brazil, Japan, and Switzerland regarding national cryptocurrency reserves.

The White House summit is expected to provide further details on the reserve’s implementation and the government’s broader cryptocurrency policy. Whether the reserve will face legal challenges or require congressional approval remains to be seen.

The establishment of this strategic reserve marks a significant step in the U.S. government’s engagement with the cryptocurrency sector, signaling a potential shift towards greater integration of digital assets into national economic strategy.