By Brett Munster
This time last year, the approval of the bitcoin ETF dominated headlines, marking a transformative moment for the crypto industry. As we highlighted in this newsletter, the crypto community widely anticipated the ETF’s approval, while much of traditional finance was caught off guard. Once trading began on January 10th, bitcoin’s price surged from $40,000 to $70,000 in just a few months, cementing the ETF’s impact.
Now, as we head into 2025, an even more consequential story is emerging: the potential creation of a U.S. “Strategic Bitcoin Reserve” (SBR). The crypto world is abuzz with speculation, fueled by Fidelity Digital Assets’ recent report predicting that “more nation-states, central banks, sovereign wealth funds, and government treasuries will look to establish strategic positions in bitcoin.” Despite this, much of Wall Street and traditional finance remain skeptical.
In this edition, we’ll explore what a Strategic Bitcoin Reserve is, the potential forms it could take, the motivations behind its consideration, and the far-reaching geo-political implications such a move could have.
A Federal Strategic Reserve Asset is a stockpile of vital resources maintained by a government to safeguard national security, ensure economic stability, and enhance resilience against crises such as natural disasters, geopolitical conflicts, economic downturns, or supply chain disruptions. The U.S. has a long history of creating and managing such reserves. Examples include the Strategic Petroleum Reserve (SPR), which stores millions of barrels of crude oil to mitigate energy supply shocks; the National Helium Reserve, ensuring access to helium for critical uses in medical imaging, scientific research, and aerospace; the Strategic National Stockpile (SNS), which holds essential medical supplies, pharmaceuticals, and vaccines to respond to health emergencies like pandemics or bioterrorism; and gold reserves secured in locations like Fort Knox, serving as financial safeguards, supporting the currency’s value, and acting as stabilizing assets during economic crises.
The concept of a strategic reserve asset is deeply rooted in economic and national security planning. What’s groundbreaking, however, is the possibility that the U.S. might formally recognize bitcoin as critical to its strategic initiatives—alongside commodities like oil and gold. Since the concept was first formally introduced at the Bitcoin 2024 conference in Nashville, numerous proposals have emerged on how an SBR could be implemented.
One proposal for a Strategic Bitcoin Reserve comes from President-elect Donald Trump, who campaigned on the promise to reclassify the approximately 200,000 bitcoin currently held by the U.S. government as a national reserve asset. Historically, the DOJ has periodically sold off these bitcoin holdings. Trump has vowed that, under his administration, the government would immediately halt such sales and instead categorize these assets as part of a strategic reserve, transferring their oversight to the Treasury Department rather than the Department of Justice. Since his election, Trump has reiterated this promise multiple times, and such a move could be implemented as early as his first day in office through an executive order.
A more ambitious approach has been put forth by Senator Cynthia Lummis. Hours after Trump’s initial campaign promise, Lummis announced she had drafted legislation that not only reclassifies the existing government-held bitcoin as a strategic reserve asset but also proposes purchasing an additional 1 million bitcoin over the next five years. Her plan includes a commitment not to sell any of these holdings for at least 20 years, a move designed to elevate the nation’s stake in “digital gold” to parity with its physical gold reserves.
To fund this substantial acquisition, Lummis’ bill hinges on a creative accounting maneuver involving the nation’s gold reserves. The gold held by the Federal Reserve is still valued at its 1973 price of $42 per ounce, far below the current market price of over $2,600 per ounce. By revaluing this gold at today’s market price, Lummis argues that the Treasury could effectively issue a check to the Federal Reserve, generating the funds needed—or nearly so—to finance the bitcoin purchases outlined in her plan.
In November 2024, Lummis formally introduced the “Bitcoin Is the Only Crypto Outstanding National” (BITCOIN) Reserve Act, which is currently under Senate consideration. While the legislative process involves multiple stages, including committee reviews and potential amendments, Lummis has publicly expressed her intent to push the bill through within the first 100 days of Trump’s presidency. She has already secured meetings with key bipartisan politicians, including incoming Treasury Secretary Scott Bessent, as part of her efforts to build support for the initiative.
Despite growing bipartisan interest in the Bitcoin Reserve Act, its passage through Congress remains uncertain. However, President Trump has an alternative path to acquire bitcoin without waiting for congressional approval. Through an executive order, he could leverage the Exchange Stabilization Fund (ESF), a mechanism created under the Gold Reserve Act of 1934 that grants the Treasury Department authority to stabilize the dollar by engaging in currency-related transactions. Over its history, the ESF has been used for a range of purposes, from purchasing gold post-World War II to guaranteeing deposits during the 2008 financial crisis and supporting loans during the COVID-19 pandemic in 2020. In theory, Trump could use this fund to initiate bitcoin purchases unilaterally, entering the market quickly and decisively. With nearly $40 billion currently available in the ESF, this approach wouldn’t fund a purchase on the scale of Senator Lummis’s proposal but would provide a substantial starting point.
If President Trump chose this route, the strategy behind its execution would be critical. Announcing an executive order to buy bitcoin upfront would almost certainly drive its price to new heights, making it significantly more expensive for the government to accumulate its intended reserve. Instead, Trump could issue a classified executive order, allowing the government to discreetly acquire bitcoin over time. Once the purchases are complete, the administration could announce the creation of a national bitcoin reserve, likely triggering a significant price surge and increasing the value of the holdings the government had already acquired. This approach would enable the U.S. to maximize its bitcoin acquisitions at lower prices and then capitalize on the market response once the reserve becomes public knowledge. In this scenario, it’s possible that the U.S. government could begin building its bitcoin reserve almost immediately after Trump takes office, with the public only learning of it much later.
It is extremely likely that we will see at the very least, an executive order reclassifying the U.S. government’s existing bitcoin holdings as a strategic reserve asset. President-elect Trump made this promise on the campaign trail, has reiterated his commitment since being elected, and could enact it with minimal political resistance. There are no significant legal or procedural barriers to issuing such an executive order, nor is there much political downside. This step would be relatively straightforward and is likely to happen early in his administration.
However, the acquisition of additional bitcoin to expand the government’s holdings is a far more complex issue. While passing a bipartisan bill through Congress would be the preferred route—given that legislation provides a level of permanence that executive orders lack—such a process is inherently slower and fraught with political challenges. Congressional approval would ensure that an SBR endures beyond a single administration, but the probability of Congress passing a bill like Senator Lummis’s proposal remains low, albeit gradually increasing. If the bill fails, it is unclear whether President Trump would be willing to expend significant political capital to unilaterally issue an executive order for large-scale bitcoin purchases, a move that could be divisive. Notably, Trump has only committed to preserving the government’s existing bitcoin holdings and has made no public statements about acquiring more. While there are multiple pathways to significantly expanding U.S. bitcoin reserves, the likelihood of such an initiative remains slim for now.
That said, external pressures could soon compel lawmakers to act on the idea of a national bitcoin reserve. Even if former President Trump refrains from issuing an executive order or Congress fails to advance related legislation, individual states are already stepping up. Four states—New Hampshire, North Dakota, Pennsylvania, and Ohio—have introduced bills to establish a Strategic Bitcoin Reserve, with projections suggesting that as many as 20 states could follow suit by year’s end. Notably, Texas, whose economy ranks as the eighth largest in the world, is among the states expected to join this movement. As more states pass bitcoin reserve laws, a ripple effect could emerge, building the political momentum needed to make a federal SBR a practical reality. This growing wave of state-level initiatives could act as a powerful catalyst, reshaping the national dialogue and strengthening the case for a federally coordinated bitcoin reserve.
Another factor intensifying pressure on politicians is the growing likelihood of foreign nations developing their own Sovereign Bitcoin Reserve. Russia, for example, is exploring the idea of creating its own SBR as part of its broader strategy to reduce reliance on traditional currencies. Legislative proposals to this effect are currently under review. Similarly, Brazil has introduced a bill proposing a national bitcoin reserve, which would gradually see the country’s central bank acquire bitcoin until it accounts for 5% of the nation’s total reserves. Japan is also contemplating a national reserve, with lawmakers like Satoshi Hamada pushing for a formalized strategy, supported by prominent figures such as Yuichiro Tamaki, who advocates for pro-crypto reforms. In Poland, presidential candidate Slawomir Mentzen has promised to establish a bitcoin reserve if elected in 2025, and members of the Dutch government have proposed selling a portion of their existing gold reserves to fund a national bitcoin reserve.
In Germany, former Finance Minister Christian Lindner publicly criticized Chancellor Olaf Scholz for liquidating the country’s bitcoin holdings earlier this year at $50,000 per coin, a decision that has since cost Germany an estimated $2.7 billion. Meanwhile, in the European Union, Member of Parliament Sarah Knafo has called for the establishment of a Strategic Bitcoin Reserve, warning that the EU is “squandering” its financial resources.
Beyond these countries, discussions around bitcoin reserves are gaining momentum in a wide array of nations, including China, Canada, South Korea, Turkey, Saudi Arabia, Argentina, Switzerland, Singapore, Nigeria, Venezuela, Kazakhstan, Ukraine, Panama, Zimbabwe, and Cuba. There are credible reports that suggest that other governments in regions like the Middle East, Latin America, and Europe may be quietly accumulating bitcoin without public disclosure. This international trend highlights the growing competition among nations to secure their position in the emerging global bitcoin economy. The game theory of bitcoin adoption strongly favors early movers, making it increasingly likely that a major nation—whether the U.S. or another country—could establish an SBR in 2025.
Which brings us to the first reason why the US should seriously consider doing this. Early adopters of bitcoin as a reserve asset are likely to accrue the largest benefits. A prime example is MicroStrategy, the first corporation to aggressively adopt bitcoin as a reserve asset. Under Michael Saylor’s leadership, the company transformed from stagnation to one of the world’s most valuable stocks. Its market capitalization skyrocketed from $1.4 billion to as high as $100 billion in just four years, outperforming every other stock including tech giants like Nvidia and Apple. This serves as a powerful analogy for nations: those that move first on bitcoin are likely to gain an outsized advantage. And as outlined earlier, a growing number of countries are already proposing or considering national bitcoin reserves. The U.S. must act swiftly if it hopes to be among the frontrunners and capture the largest benefits.
For the U.S., the impact of creating an SBR would extend far beyond its own borders. As the world’s largest economy, a U.S. endorsement of bitcoin as a reserve asset would send an unequivocal signal to other nations that bitcoin is worthy of adoption at the sovereign level. If other governments believe that bitcoin’s long-term value will continue to rise—as it has over the past 15 years—there’s only one logical response: to buy bitcoin themselves. In this scenario, the U.S., already holding one of the largest bitcoin reserves, would be perfectly positioned to benefit from the ensuing global “bitcoin arms race.” Early adoption would ensure the U.S. maintains a strategic edge as bitcoin becomes a cornerstone of the global financial system.
But the advantages don’t stop at price appreciation. A U.S. SBR could become a key tool for addressing the nation’s debt crisis. Today, the U.S. faces an unsustainable debt burden with no viable plan to reduce it, as structural reforms to entitlement programs like Social Security, Medicare, and Medicaid remain politically unfeasible. Bitcoin could offer a path forward. If its value continues to soar over the next decade, an SBR could be used to pay down a substantial portion—perhaps even half—of the national debt, without raising taxes. This concept is explicitly detailed in Senator Lummis’s proposed legislation, underscoring its potential to transform the U.S. fiscal landscape.
Beyond debt reduction, an SBR could reinforce the U.S. dollar’s dominance in the face of mounting challenges from China, Russia, and the broader BRICS bloc. These nations are actively pursuing de-dollarization, dumping U.S. Treasuries in favor of gold and promoting alternative currencies. By embracing bitcoin, the U.S. could counter this trend. A U.S.-led bitcoin reserve would likely redirect global investment flows, pulling capital away from gold and into bitcoin. If combined with stablecoin legislation, this approach could bolster demand for U.S. Treasuries—given the direct linkage between stablecoins and these assets—further reinforcing the dominance of the U.S. dollar on the global stage.
The geopolitical implications are profound. A U.S. bitcoin reserve could act as a counterweight to China and Russia’s economic maneuvers, ensuring that the dollar remains the backbone of the global financial system. By leveraging bitcoin’s unique properties—scarcity, security, and global acceptance—the U.S. could simultaneously reduce its debt, bolster its economic influence, and outmaneuver adversaries in the financial arena. When viewed through this lens, the creation of an SBR is not just strategic—it’s a no-brainer.
The creation of an SBR would undoubtedly mark one of the most groundbreaking economic developments in U.S. history. It would stand alongside pivotal moments such as the 1933 Executive Order 6102, which confiscated citizens’ gold, Nixon’s 1971 decision to abandon the gold standard, and the 2008 bank bailout. However, unlike these past events, which were largely reactions to crises, the establishment of an SBR could be undertaken as a forward-thinking move from a position of strength.
Not long ago, the concept of an SBR was relegated to niche discussions within bitcoin circles. Today, it has gained traction at the highest levels of government and geopolitics, with a president, states, and even other nations beginning to explore its potential seriously. Bitcoin has transitioned from a speculative asset to a tool that could play a central role in national and global strategy. What remains to be seen is how this vision materializes and whether the SBR becomes a reality. One thing is clear: it’s not priced into today’s market. Just as Wall Street and traditional finance underestimated the impact of bitcoin ETFs, they may again be behind the curve on the implications of an SBR.
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DOJ cleared to sell $6.5B in bitcoin.
Financial advisors allocating crypto to clients doubles to 22% in 2024.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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