The US Strategic Bitcoin Reserve
Key Takeaways
- President Trump signed an EO last week to establish a Strategic Bitcoin Reserve
- The US government’s digital asset holdings stem from criminal asset recovery
- A US SBR will diversify national holdings, much like the gold reserve
Digital Asset Commentary
The macro risk-off rally continues as concerns about economic growth and recession intensify. Bitcoin, still considered a risk asset by many, has not been immune to the downturn—despite last week’s Executive Order establishing a Strategic Bitcoin Reserve (SBR) and a digital asset stockpile. Only Bitcoin (BTC) was designated as a potential addition to the reserve, provided it is acquired in a budget-neutral manner. Other digital assets in the stockpile, which are set to undergo an audit, may be liquidated to purchase more BTC. A potential strategy to acquire more BTC for the SBR may include using the country’s vast energy resources to obtain more BTC directly via mining.
The current reserve consists of coins obtained through law enforcement actions and civil asset forfeiture. Of the nearly 200,000 BTC currently held in the SBR, almost half originates from a 2015 exchange hack and is slated for return to its original owner, Bitfinex.
Arguments for any country to establish a Strategic Bitcoin Reserve (SBR) include hedging against fiat devaluation, diversifying reserves, enhancing sovereignty and financial independence, providing insurance against geopolitical uncertainty, and capitalizing on Bitcoin's growth potential. Conversely, arguments against an SBR primarily cite Bitcoin’s volatility and the lack of historical precedent for long-term stability. Unlike gold, BTC is easier and cheaper to custody, offers greater portability, and is resistant to seizure. Advances in Multi-Party Computation (MPC) custody leverage multi-signature technology, ensuring that a transaction is authorized only when the required signature threshold is met.
