03-03-2025
$300 billion Trump crypto rally re-ignites reserve fight
A cryptocurrency reserve held by the U.S. government would not necessarily require taxpayer money for the feds to set up a stash of several billion dollars' worth, but that doesn't mean everyone — even everyone in the crypto industry — thinks it is a good idea.
Why it matters: President Trump, who calls himself America's "first crypto president," stoked a $300 billion cryptocurrency rally this past weekend with a social post about a reserve that would include several major cryptocurrencies.
Friction point: There's a lot of blowback to the whole idea, particularly if it were funded by taxpayers.
"I think reserves actually make no sense," Latif Peracha, general partner at early stage venture fund, M13, which has invested in many crypto-connected companies, including many with a bitcoin focus, told Axios.
While he acknowledges that such a program would be good for some of his investments, he doesn't think the idea holds up to geopolitical scrutiny, especially if it undermines U.S. Treasuries as the go-to safe haven for other nations.
"I think that's long term a potential risk to a dollar-first global order," Peracha said. Instead, he said, the Trump administration should put all its political capital into advancing stablecoins rather than diverting some of it to this reserves idea, he said.
Yes, but: Perarcha's view isn't necessarily the blockchain consensus.
Many CEOs and leaders in the industry support the general concept — though they tend to diverge on just how many flavors of crypto assets the U.S. should hold.
"The reserve going beyond bitcoin to also include the key crypto assets ethereum, XRP, Solana and Cardano shows that the Trump administration is serious about this," Mena Theodorou, a co-founder at the crypto exchange Coinstash, said in a statement sent to Axios.
Others differ. "Bitcoin is the only one that makes sense to hold in a strategic reserve," Zach Burks, CEO of Mintable, an NFT creation platform, wrote in a statement.
Reality check: Andrew O'Neill, managing director of digital assets for S&P Global Ratings, wrote that Bitcoin has some of the same properties as gold, giving it a reasonable narrative as a national reserve asset.
But, for a nation-state, the other "assets differs significantly from BTC and tech venture investment is less common for sovereigns."
What they're saying: The chief of crypto and AI for the White House, David Sacks, has urged critics to wait and see what the administration actually plans to propose.
"Nobody announced a tax or spending program," Sacks wrote on social media.
Even still, critics like crypto researcher Molly White argue that any such initiative will only benefit those who already hold the chosen crypto assets, "rather than benefit all Americans."
Between the lines: A strategic reserve still raises the fundamental question: What's the strategy?
Bharat Ramamurti, the Biden-era deputy director of the National Economic Council, now with the the American Economic Liberties Project, noted to Axios that past strategic reserves had to be created with an act of Congress.
As Ramamurti explained, the U.S. has reserves in commodities like petroleum in order to take action in the market when costs are hurting Americans. Bitcoin is not so widely used by Americans that such market operations would be easy to justify.
The other problem that has to be addressed is how to actually get the coins in question for a reserve.
The United States already holds over $17 billion in crypto assets that it seized from criminals in various operations.
The US could just use seized assets, redirect revenue to buying additional assets, or seek appropriations to buy crypto assets from Congress.
So far, the White House has not described its planned approach.
💭 Our thought bubble: Sitting on seized digital assets is passive investment, government style.
If the feds start trading those assets to hit certain allocation targets, that's not passive. It's a recipe for drama among Trump's supporters and fodder for his critics.
What's next: Last week, the administration announced a summit devoted to cryptocurrency for this Friday, and the reserve is on the agenda. "More to come at the summit," Sacks tweeted.
An administration spokesperson directed Axios to these tweets from Sacks rather than provide further details about its plans.
Emily Peck contributed.
