What was the executive order signed by Trump on crypto reserve? 

US President Donald Trump on March 6 signed an executive order to establish a Strategic Bitcoin Reserve and a US Digital Asset Stockpile, as he aims to ‘position the United States as a leader among nations in government digital asset strategy’.

The reserve would be capitalised with bitcoin owned by the Department of Treasury that was forfeited as part of criminal or civil asset forfeiture proceedings. Other agencies would evaluate their legal authority to transfer any bitcoin owned by those agencies to the reserve, the order clarified.

The reserve would function much like Strategic Petroleum Reserves that countries maintain as a hedge against unexpected problems with supply of the fuel.

What is cryptocurrency?

A cryptocurrency is a digital asset. It was initially envisaged as a payment system which is democratically created and owned by the public, with no government intervention. But there is extremely limited acceptance for cryptos as a payment method anywhere globally. With the payment channel having been misused for money laundering, terror financing etc, most countries are unwilling to give it the status of a legal tender.

But since cryptos such as bitcoins are limited in number, their value has been climbing. They are now bought and sold like other assets such as gold.

Will the US buy bitcoins?

The order also clarified that the US would not sell bitcoin deposited into this Strategic Bitcoin Reserve, which will be maintained as a store of reserve assets.

“The Secretaries of Treasury and Commerce are authorised to develop budget-neutral strategies for acquiring additional bitcoin, provided that those strategies impose no incremental costs on American taxpayers,” it said.

How about other cryptocurrencies?

The US is also establishing a Digital Asset Stockpile, that would have digital assets other than bitcoin, according to a Fact Sheet put out by the Trump administration that explains the executive order. The government will not acquire additional assets for the US Digital Asset Stockpile beyond those obtained through forfeiture proceedings.

The Secretary of the Treasury may determine strategies for responsible stewardship, including potential sales from the US Digital Asset Stockpile.

Agencies must provide a full accounting of their digital asset holdings to the Secretary of the Treasury and the President’s Working Group on Digital Asset Markets.

How have the prices of bitcoin and other cryptocurrencies moved since Trump’s January order?

Bitcoin prices have declined since Trump’s January 23 order which revoked the previous administration’s efforts on international engagement on digital assets and brought all work relating to central bank digital currency to a halt.

Since then, the bitcoin price has slumped about 20% to $82,264 at the time of writing. On March 3, Trump said in a post on Truth Social that his January executive order on digital assets would create a stockpile of XRP , SOL and ADA currencies, surprising traders by choosing three lesser-known tokens and sending their prices briefly soaring. But since then, Solana, XRP and ADA have slid about 50%, 31% and 23%, respectively.

Why are markets not impressed by the crypto reserve?

The bitcoin ecosystem had likely been hoping for a more aggressive crypto programme by the US administration. That the US would not be buying bitcoins but would only be capitalising the value of bitcoins forfeited in legal cases and that are already in the possession of government agencies, has left investors disappointed. A mandate to buy bitcoins would have spurred prices upwards and likely even set off a race by sovereign governments to acquire bitcoins like they are stocking up on gold now.

Why a stockpile now?

The order is clear that with a total estimated, fixed supply of only 21 million bitcoins, “there is a strategic advantage to being among the first nations to create a Strategic Bitcoin Reserve.”

The move would help bring US bitcoin management under a single umbrella as opposed to what the administration calls “the current disjointed handling of cryptocurrencies seized through forfeiture by, and scattered across, various Federal agencies.”

The fact sheet points out that the creation of the reserve would “harness the power of digital assets for national prosperity”.

In his campaign trail last year, Trump had promised to make the US the “crypto capital of the world.”

Trump has appointed a “crypto czar” and the first-ever crypto summit was recently hosted at the White House.

Are bitcoins a good asset to add to your portfolio?

In December, an article that appeared in businessline was clear that bitcoins were “neither a store of value nor do they help in transacting business”.

Back in 2014, Andreesen Horowitz partner Chris Dixon had predicted that bitcoin – that was trading at $800 then – would climb to $100,000 in value. His bet was based on the hunch that bitcoin would become the primary means of paying for online transactions. But that has not yet happened.

With just about 11 million monthly active Bitcoin users (measured by the monthly active crypto addresses), per report put out by Andreessen Horowitz last year, only a miniscule percentage of those transacting online are using Bitcoin.

This is unlike any other true innovation of the past 15-year time horizon. For example, within 15 years of the Internet being introduced to the public, there were over 1.5 billion active users.

In a note put out about a year ago, JP Morgan argued that bitcoin could at best be viewed as an asset and, that too, not a well-diversified one. Its three-year rolling correlations with stocks and bonds are both positive, as most cryptocurrencies have behaved like risk assets with hyper-sensitivity to interest rates since 2020, the brokerage pointed out.

Published on March 10, 2025