The U.S. government’s existing bitcoin holdings of over 208,000 BTC, valued at approximately $19 billion, raise the question: Could the government establish a formal bitcoin reserve? The answer largely depends on how “reserve” is defined.
The simplest approach would be for the U.S. to stop selling the bitcoin it already possesses, a move previously suggested by former President Donald Trump in his Nashville speech. Alternatively, the government could take a more active role in acquiring additional bitcoin, a strategy backed by figures like Senator Cynthia Lummis and Robert F. Kennedy, who argue for the government to make large-scale bitcoin purchases.
Currently, the U.S. holds 208,109 BTC, mainly acquired through the confiscation of assets tied to criminal activity. Traditionally, the government has sold these seized bitcoins via auctions. However, Trump’s proposal would see the government hold on to all bitcoin, both current and future, without liquidating any of it.
While the concept seems simple, implementing such a policy would be far from straightforward. Multiple federal agencies—such as the Department of Justice, U.S. Marshals Service, and the U.S. Treasury—would need to collaborate to develop a process for managing the bitcoin.
“There’s no formal policy in place,” said Perianne Boring, CEO of The Digital Chamber, a crypto advocacy group. “We’re basing everything on a speech rather than written policy. Can the government move bitcoin between different agencies? It’s unclear.”
Boring also pointed out that transferring bitcoin between federal departments might require congressional approval, especially if it were to be treated as a strategic reserve. However, she noted that it remains uncertain what the president could do unilaterally with executive power.
Moish Peltz, a partner at Falcon, Rappaport & Berkman, said that the rules governing seized bitcoin could vary by department and depend on the method by which the bitcoin was originally seized. He speculated that some seized bitcoin might require congressional action to be classified as part of a reserve, while other portions might not.
The process of creating a bitcoin reserve would likely take time. Peltz mentioned that the government’s experience with handling seized bitcoin demonstrates a capacity to manage these assets effectively. “As the regulatory environment evolves and legislation is passed, the government could build a more robust strategy for digital assets,” he noted.
While holding seized bitcoin is one potential approach, Senator Lummis has proposed a more aggressive strategy in a new bill: to sell a portion of the U.S. gold reserves and use the funds to buy 1 million bitcoin. At current prices, this would require an investment of at least $90 billion, though the government would likely need to act swiftly if the bill were passed.
Peltz explained that while an executive order could set the process in motion, securing such a large financial commitment would likely require an act of Congress to establish the necessary legal framework.
Boring expressed confidence that the bill could pass, particularly with Republicans soon to control both the House and the Senate. “It’s definitely possible,” she said, though she suggested it could take longer than 100 days to move the bill through Congress.
However, Nic Carter, partner at Castle Island Ventures, expressed doubts. He pointed out that congressional priorities on cryptocurrency right now are focused on stablecoin regulation and addressing concerns like Operation Choke Point 2.0. “The strategic reserve didn’t come up in any of my meetings,” he shared on X.
Could the U.S. government bypass Congress and buy bitcoin independently? Zack Shapiro, head of policy at the Bitcoin Policy Institute, proposed a novel theory: the Treasury could use the Exchange Stabilization Fund (ESF) to acquire bitcoin through debt instruments, avoiding direct market purchases. This method would allow the Treasury to gain bitcoin without causing market disruptions or directly impacting the price.
Market predictions for the U.S. government holding bitcoin reserves by 2025 are uncertain. Polymarket bettors assign a 30% chance to the government establishing such a reserve between January and April 2025.
