New Changes in the Global Financial Order: The U.S. Strategic Bitcoin Reserves
This is another important milestone in the cryptocurrency industry.On March 6, 2025, U.S. President Trump signed the executive order "Establishing a Strategic Bitcoin Reserve and U.S. Digital Asset Reserve." The next day, the White House held a crypto summit.
This is another significant milestone for the crypto industry.
Bitcoin Enters the Arena: A New Chessboard for U.S. Strategic Reserves
We look at this matter from the perspective of the U.S. government. The purpose of establishing a Bitcoin strategic reserve is to strengthen and consolidate the U.S.'s dominant position in the global financial system.
The executive order states clearly: "The U.S. government currently holds a large amount of BTC but has not yet formulated relevant policies to leverage the strategic value of these BTC in the global financial system. Just as it is in the national interest to properly manage ownership and control of other resources, we must harness rather than restrict the potential of digital assets to promote national prosperity."
There have been multiple precedents for strategic reserves in U.S. history. For example:
Strategic Gold Reserves - In the 19th century, the U.S. implemented the gold standard, with the value of the dollar supported by gold reserves. In 1933, President Roosevelt signed Executive Order 6102, prohibiting private ownership of gold and mandating the return of gold to the Federal Reserve; in 1934, the U.S. introduced the Gold Reserve Act, transferring gold reserves to the Treasury; in 1944, the U.S. established the Bretton Woods system, promising to exchange gold at $35 per ounce, making the dollar the international currency; it wasn't until 1971, during President Nixon's term, that the dollar was decoupled from gold, leading to the collapse of the Bretton Woods system and the end of the gold standard.
Strategic Petroleum Reserves - In 1974, the U.S. reached an agreement with Saudi Arabia and OPEC countries that international oil trade must be conducted in dollars, naturally making the dollar the global reserve currency; in 1975, Congress passed the Energy Policy and Conservation Act, establishing the Strategic Petroleum Reserve (SPR), which peaked at nearly 700 million barrels, dropping to 350 million barrels by 2024. On June 9, 2024, the oil dollar agreement between the U.S. and Saudi Arabia officially expired, with Saudi Arabia announcing it would not renew.
Of course, there are also some strategic reserves with less far-reaching impacts, including uranium, rare earths, silver, and food.
Less than a year after the end of the petrodollar system, the U.S. established a strategic Bitcoin reserve. This indicates that the consensus on Bitcoin as "digital gold" is already quite strong.
Strategic Considerations for the U.S. Bitcoin Reserve
1. Consolidation of Dollar Financial Hegemony
For a long time, the dollar has dominated the global financial system, serving as the primary currency for international trade and financial transactions. However, with changes in the global economic landscape, the rise of emerging economies, and the reshaping of geopolitical dynamics, the dollar's financial hegemony is facing challenges.
Bitcoin, as a decentralized digital currency, has unique advantages in global circulation; its transactions are not controlled by traditional financial institutions and governments, allowing for rapid transactions and convenient circulation across geopolitical boundaries.
If the U.S. strengthens the connection between the dollar and Bitcoin and Crypto, and establishes a Bitcoin strategic reserve first, it could occupy a high ground in the Crypto field, incorporating the Crypto market into the dollar settlement system, thereby consolidating the dollar's position in international financial transactions. This would undoubtedly be a strong defense of its dollar financial hegemony in the new financial era.
As Trump mentioned at the White House crypto summit, establishing a Bitcoin reserve is akin to creating a "virtual Fort Knox" (Fort Knox is a U.S. base that stores the national gold reserves). He also noted that congressional legislators are pushing for clarity in the regulation of dollar stablecoins and the digital asset market, and he will ensure the long-term stability of the dollar's position.
The chess pieces have been placed, and the momentum has been established. From a top-level design perspective, this may be the first public announcement of such an idea. However, U.S. companies have already laid out key tracks in the Crypto field: in asset issuance—despite industry criticisms regarding the inability to achieve trustlessness in the RWA tokenization process, Franklin Templeton has become the largest traditional financial institution issuing U.S. Treasury RWA; in asset securitization—traditional financial institutions led by BlackRock have issued U.S. BTC spot ETFs with total assets under management exceeding $100 billion; in asset trading and custody—Coinbase, a Nasdaq-listed company, is a major custodian for ETFs.
What is currently lacking is a clear regulatory framework to protect the crypto industry from similar "unclear boundaries of suppression by the Biden administration," as well as the cross, disorderly, and ambiguous regulation from multiple government departments.
2. A Tool Against Inflation
Theoretically, establishing a strategic Bitcoin reserve can hedge against inflation to some extent.
According to World Bank data, the M2 curve for the U.S. from 1960 to the present is shown in the following chart:
The scale curve of U.S. national debt is shown in the following chart:
The total federal government debt in the U.S. has surpassed $36 trillion, reaching a historic high. Moreover, the ratio of U.S. federal government debt to GDP has been rising in recent years, reflecting that the speed of debt growth exceeds that of economic growth. Due to the expansion of debt and the current high interest rate environment, U.S. federal government interest expenditures are expected to reach approximately $882 billion in 2024, creating a significant fiscal burden.
Bitcoin, as "digital gold," can serve as a potential "tool" against inflation and to address the national debt issue. Governments worldwide tend to stimulate the economy by increasing the money supply, leading to currency devaluation and inflation. Bitcoin's fixed supply makes it an ideal asset for resisting inflation.
There are multiple reasons prompting the U.S. government to establish a strategic Bitcoin reserve. In addition to consolidating the dollar's hegemonic position and combating inflation, from the perspective of financial innovation, Bitcoin and blockchain bring new development opportunities to the financial industry; from the standpoint of global financial competition, as mentioned in this executive order, "the country that establishes a strategic Bitcoin reserve first will gain a strategic advantage"; from the perspective of U.S. authorities' interests, Trump is fulfilling a campaign promise, and the influence of U.S. Crypto-related interest groups has significantly increased in this Trump administration, impacting government decision-making.
The far-reaching impact on the Crypto market is that the executive order's benefits are below market expectations. The key requirements in this executive order include:
The Secretary of the Treasury shall establish an office responsible for managing and controlling the custodial account of the "Strategic Bitcoin Reserve" (SBR), with reserve funds sourced from BTC seized in criminal or civil cases. BTC deposited into the SBR shall not be sold.
The Treasury Department shall establish an office responsible for managing and controlling the custodial account of the "U.S. Digital Asset Reserve," with reserve funds sourced from all digital assets held by the Treasury Department, excluding BTC. The Treasury Department shall develop a strategy for responsible management of the U.S. digital asset reserve (it does not state that they cannot be sold).
The Secretary of the Treasury and the Secretary of Commerce shall develop strategies to acquire additional government BTC without increasing the budget or imposing additional costs on U.S. taxpayers. (How to acquire more BTC? You figure it out…)
The approximately 200,000 BTC currently held by the U.S. government were seized from criminal or civil cases. Trump has instructed the Treasury Secretary and Commerce Secretary to devise strategies to "increase Bitcoin reserves without incurring any costs to taxpayers."
The plan in this executive order falls short of market expectations, primarily because the community was teased by another federal-level bill—the "Bitcoin Act" submitted by Senator Cynthia Lummis (proposing that the U.S. Treasury purchase 1 million BTC over five years and hold them for 20 years), which has already been rejected.
Federal-level Crypto-related bills still in progress have a neutral impact on the market.
In the U.S., presidential executive orders (EO) and congressional legislation have some differences. Unfortunately, recent federal-level Bitcoin-related bills have not succeeded in legislation. Currently, there are three Crypto-related bills being advanced 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 somewhat irrelevant and likely to fail; the Keep your Coins Act (H.R.148) proposes to protect individuals' rights to self-custody of crypto assets; the GENIUS (Guiding and Establishing National Innovation in U.S. Stablecoins) Act is a regulatory bill for dollar stablecoins, setting licensing and reserve requirements for dollar stablecoin issuers.
Trump expressed at the White House crypto summit that he hopes to have the dollar stablecoin innovation bill (GENIUS Act) on his desk for signing before the August recess. The community may not have high expectations for this bill, as there seems to be no substantial benefits.
State Government Strategic Bitcoin Reserve Bills May Be Worth Watching
In addition to federal-level legislation, some state governments are also actively promoting the legislative process for the Strategic Bitcoin Reserve Act, such as Arizona, Texas, New Hampshire, and Oklahoma. Five states have already rejected it, including Montana, North Dakota, South Dakota, Pennsylvania, and Wyoming.
The process for state governments in the U.S. to establish strategic Bitcoin reserve bills generally requires: first, state legislators or committees draft and submit the bill to the state legislature; then it goes through voting in both the House and Senate of the state legislature; finally, if both chambers pass, it is sent to the governor for signing.
The following chart shows the legislative process for the strategic Bitcoin reserve bill currently underway in Arizona:
The content of each state's strategic Bitcoin reserve bill varies. For example, Oklahoma proposes allowing the state government to invest 10% of public funds in Bitcoin or any digital asset with a market cap exceeding $500 billion; Kentucky proposes investing up to 10% of remaining cash in cryptocurrencies with a market cap exceeding $750 billion and stablecoins that have received appropriate regulatory approval.
Overall, Trump's strategic Bitcoin reserve EO will undoubtedly be beneficial in the long run. In terms of policy, as long as Trump's executive order does not change frequently, the next few years will at least see a friendly policy environment. In terms of funding, although there is no plan for the federal level to increase BTC holdings by a million, if state proposals pass, there could be real investments. In terms of market supply and demand, on the supply side, Bitcoin seized by the U.S. government will be deposited into the strategic Bitcoin reserve and cannot be sold, reducing the selling pressure of Bitcoin in the market; on the demand side, the U.S. government's strategic Bitcoin reserve decision may attract more investors' interest in Bitcoin, including some traditional financial institutions and large enterprises, which could alleviate their concerns about engaging in crypto business and may even trigger more countries to establish strategic Bitcoin reserves.
Conclusion
To quote Michael Saylor: History will remember the moment the U.S. established its strategic Bitcoin reserve—this is a turning point in the financial and geopolitical landscape of the 21st century.
