Source: IOBC Capital

On March 6, 2025, US President Trump signed an executive order "Building Strategic Bitcoin Reserves and U.S. Digital Asset Reserves." The next day, another White House crypto summit was held.

This is another important milestone in the crypto industry.

Bitcoin enters the house: New chess game of US strategic reserves

We look at this from the perspective of the United States. The purpose of the United States to establish its strategic Bitcoin reserve is to strengthen and consolidate the United States' dominance in the global financial system.

The executive order is clear: "The United States currently holds a large amount of BTC, but has not yet formulated relevant ones to realize the strategic value of these BTCs in the global financial system. Just as it is in interest to properly manage ownership and control of other resources, we must leverage, not limit the potential of digital assets to promote prosperity."

There are many precedents of strategic reserves in the history of the United States. For example:

Strategic Gold Reserves—In the 19th century, the United States implemented a gold standard, and the value of the US dollar was supported by gold reserves. In 1933, President Roosevelt signed Executive Order No. 6102, prohibiting private holdings of gold, forcibly recovering gold and depositing it into the Federal Savings Bank; in 1934, the United States introduced the Gold Reserve Act, handing over gold reserves to the Ministry of Finance; in 1944, the United States passed the Bretton Woods system, promising to exchange gold at $35 per ounce, making the US dollar an international currency; it was not until 1971 when Nixon President announced the decoupling of the US dollar from gold, the Bretton Woods system collapsed, and the gold standard ended.

Strategic Petroleum Reserves - In 1974, the United States reached an agreement with Saudi Arabia and OPEC. The international trade of oil must use the US dollar, and the US dollar naturally became the global foreign exchange reserve currency; in 1975, the US Congress passed the Energy and Savings Act to establish the Strategic Petroleum Reserve (SPR). At its peak, the United States SPR reserves were nearly 700 million barrels, and the reserves dropped to 350 million barrels in 2024. On June 9, 2024, the petrodollar agreement between the United States and Saudi Arabia officially expired, and Saudi Arabia announced that it would not renew it.

Of course, there are some strategic reserves with less far-reaching impacts, including uranium, rare earths, silver, grain, etc.

The petrodollar system has ended less than a year, and the United States has established a strategic Bitcoin reserve. This shows that the consensus on Bitcoin’s “digital gold” is already very strong.

Strategic considerations for US strategic Bitcoin reserves

1. Consolidation of US dollar financial hegemony

For a long time, the US dollar has dominated the global financial system and is the most important settlement currency for international trade and financial transactions. However, with the changes in the global economic landscape, the rise of emerging economies, and the reshaping of the geographic landscape, the US dollar's financial hegemony is facing challenges.

BitAs a decentralized digital currency, currency has unique advantages in global circulation. Its transactions are not controlled by traditional financial institutions and can break through geographical restrictions and achieve rapid transactions and convenient circulation around the world.

If the United States can occupy a commanding height in the Crypto field by strengthening the connection between the US dollar and Bitcoin and Crypto by taking the lead in establishing a strategic reserve of Bitcoin, and incorporate the Crypto market into the US dollar settlement system, thereby consolidating the US dollar's position in international financial transactions, it will undoubtedly be another strong defense of its US dollar financial hegemony in the new financial era.

As Trump mentioned at the White House Crypto Summit, establishing Bitcoin reserves is to establish "virtual Fort Knox" (Fort Knox is a base in the United States that stores treasury gold). At the same time, he also mentioned that Congressional lawmakers are pushing bills on the regulatory clarity of the US dollar stablecoins and digital assets markets, and he will ensure that the US dollar's status remains stable for the long term.

The chess has fallen and the momentum has been accomplished. From the top-level design perspective, this may be the first time that such an idea has been publicly announced. But in fact, American companies have already laid out key tracks in the Crypto field: Asset issuance - Although the industry still criticizes the fact that Trustless cannot be achieved during the tokenization of RWA, Franklin Templeton has become the largest traditional financial institution for issuing US bonds; In terms of asset securitization - The total asset management scale of US BTC spot ETFs issued by traditional financial institutions led by BlackRock has exceeded US$100 billion; In terms of asset trading and custody - Nasdaq listed company Coinbase is the main custodian of ETFs.

What is missing now is a clear set of regulatory bills to protect the crypto industry from such "Biden's unclear border suppression" as well as the cross, disorderly and fuzzy supervision of multiple departments.

2. A powerful tool to fight inflation

Theoretically, establishing strategic Bitcoin reserves can hedge inflation to a certain extent.

According to data from the World Bank, the M2 curve of the United States from 1960 to the present is as follows:

The scale curve of the US Treasury bond is as follows:

The total amount of federal debt in the United States has exceeded US$36 trillion, a record high. Moreover, the proportion of US federal debt to GDP has continued to rise in recent years, reflecting that debt growth rate exceeds economic growth rate. Due to the expansion of debt and the current high interest rate situation, the U.S. federal interest expenditure reached about $882 billion in 2024, which is a bit large in fiscal burden.

Bitcoin is "digital gold" that can be used as a potential "weapon" to fight inflation and solve the problem of Treasury bonds. All will stimulate the economy by issuing additional currencies, resulting in currency depreciation and integration.Inflation. The total amount of Bitcoin is constant, so it is regarded as an ideal asset to resist inflation.

The reasons that prompted the United States to establish strategic Bitcoin reserves are many. In addition to consolidating the hegemony of the US dollar and fighting inflation, from the perspective of financial innovation demand, Bitcoin and blockchain have brought new development opportunities to the financial industry; starting from the global financial competition, just as mentioned in this executive order, "those who are the first to establish strategic Bitcoin reserves will gain strategic advantages"; from the perspective of the interests of the US authorities, Trump is fulfilling his promises during the campaign, and the influence of the relevant interest groups in the Trump team has been significantly improved, which has had some impact on decision-making.

Far-reaching impact on the Crypto market

Trump's executive order is not as good as market expectations

The key requirements in this executive order are:

1. The Secretary of Finance should set up an office to manage and control the escrow account of the "Strategic Bitcoin Reserve" (SBR), which comes from BTC held by the Ministry of Finance, for criminal or civil cases. BTC deposited in SBR shall not be sold.

2. The Ministry of Finance should set up an office to manage and control the escrow account of the “US Digital Asset Reserve”, which is derived from all digital assets held by the Ministry of Finance except BTC. The Treasury Department should formulate a strategy to manage the U.S. digital asset reserves responsibly (it's said it can't be sold).

3. The Secretary of Treasury and Commerce should develop strategies to obtain additional BTC, and cannot increase the budget and cannot incur additional costs for U.S. taxpayers. (How to get more BTC? You can find a way for yourself...)

The approximately 200,000 BTCs in the United States are confiscated from criminal or civil cases. Trump asked the Treasury Secretary and Commerce Secretary to formulate a strategy to "increase the holdings of Bitcoin reserves without incurring any costs to taxpayers."

The executive order’s plan is inferior to market expectations, mainly because the community has been stolen by another federal-level bill - the “Bitcoin Act” submitted by Senator Cynthia Lummis (proposed that the U.S. Treasury purchase 1 million BTC within 5 years and hold it for 20 years), has been rejected.

The Crypto-related bills that are still being promoted at the federal level have a neutral impact on the market

In the United States, there are still some differences between the Presidential Executive Order (EO) and Congressional Legislation. Unfortunately, the recent Bitcoin-related bills at the federal level have not been successfully legislated. There are three Crypto-related bills currently being promoted at the federal level:

H.R.148: Keep your Coins Act of 2025

S394: GENIUS Act of 2025

HRes111: Expressing support for blockchain technology and digital assets.

Among them, HRes111 is a bit foolish and has no content, and it is likely to fail; Keep your Coins Act (H.R.148) proposes to protect individuals' self-custody of crypto assets; GENIUS (Guiding and Establishing National Innovation in U.S. Stablecoins) Act is a regulatory bill for US dollar stablecoins. The content of this bill is to set licensing and reserve requirements for US dollar stablecoins issuers.

Trump said at the White House crypto summit that he hopes to send it to his desk before the recess in August to sign the GENIUS Act. Maybe the community doesn’t expect much from this bill because it really doesn’t show any substantial benefits.

The strategic Bitcoin Reserve Act of each state may be expected

In addition to federal legislation, some states are also actively promoting the legislative process of the Startegic Bitcoin Reserve Act, such as Arizona, Texas, New Hampshire, Oklahoma, etc. Five states have also rejected it, including Montana, North Dakota, South Dakota, Pennsylvania, and Wyoming.

The process of establishing a strategic Bitcoin reserve bill in the United States requires: first drafting by state legislators or committees and submitting it to the state legislature; then voted by the House and Senate of the state legislature; finally, if both houses of the state legislature pass, it will be submitted to the governor for signature.

The following figure is Arizona’s ongoing Strategic Bitcoin Reserves Act Legislative Process:

The content of each state’s Strategic Bitcoin Reserves Act is different, for example: Oklahoma is proposing to allow states to invest 10% of public funds in Bitcoin or any digital asset with a market capitalization of more than $500 billion; Kentucky is proposing to invest up to 10% of the remaining cash in cryptocurrencies with a market capitalization of more than $750 billion and stablecoins with appropriate regulatory approval.

Overall, Trump's strategic Bitcoin reserve EO will definitely be a positive in the long run. As long as Trump's executive orders do not change every day, at least the next few years will be a friendly environment. On the funding side, although there is no plan to increase the holdings of millions of BTC at the federal level, if the proposals are passed or there are real silver investments. On the supply side of the market, on the supply side, the United States has deposited Bitcoin in strategic Bitcoin reserves and cannot be sold, reducing the circulation of Bitcoin in the market.Selling pressure; on the demand side, the US strategic Bitcoin reserve decision may attract more investors' interest in Bitcoin, including some traditional financial institutions and large enterprises, which may eliminate concerns for their crypto business and may even trigger more strategic Bitcoin reserves.

Conclusion

Quoting Michael Saylor: History will engrave the moment when the US strategic Bitcoin reserve is established - this is the turning point in the financial and geographic pattern in the 21st century.