Trump announces new US digital reserve plan, sparking cryptocurrency market surge
US president Donald Trump has used social media to name five digital assets expected to be included in a new strategic reserve of cryptocurrencies.
An executive order in January has tasked a cryptocurrency working group with creating a stockpile of digital assets including Bitcoin, Ethereum, XRP, Solana and Cardano.
The order called on the group to “evaluate the potential creation and maintenance of a national digital asset stockpile,” which could use up to US$19 billion in cryptocurrencies “lawfully seized” by the federal government through its law enforcement efforts.
Heart of the reserve
Mr Trump has since announced on the Truth Social platform that Bitcoin and Ethereum will be “at the heart” of the new reserve, leading to a surge in crypto prices.
“A national crypto reserve will elevate this critical industry after years of corrupt attacks—I will make sure the US is the crypto capital of the world,” he posted.
XRP, Solana and Cardano rocketed higher in price following the post, while Bitcoin and Ethereum each rose by more than 10%.
The total cryptocurrency market gained around US$300b within hours of the announcement.
Courting crypto
Mr Trump’s latest effort to court the cryptocurrency industry is in sharp contrast to the previous Biden administration, which staged a crackdown on crypto due to concerns about fraud and money laundering.
While the government has previously sold off its crypto holdings from time to time, some economists have suggested Mr Trump could simply retain the current total to establish a stockpile.
Alternatively, the government could stock the reserves by acquiring significant amounts of new crypto, potentially providing a further boost to the crypto industry.
Crypto advocates believe a stockpile would help shrink the national debt by increasing federal revenue through the growing value of the government’s crypto investments.
Evolving legal framework
Establishing a crypto reserve might be easier said than done, with some arguing that crypto is too new to be part of a US reserve.
“Digital assets are still a relatively new class of investments and the legal framework around it is evolving,” one economist said.
Debate is already underway regarding the legality of the proposal, especially with ownership of most of these tokens so highly concentrated among a few people or institutions.
Any such move would also likely require congressional approval.