There are reasons for governments to stockpile essential commodities. America has a Strategic Petroleum Reserve to protect against disruptions in the global oil market or for use during natural disasters or other emergencies. China’s strategic pork reserve helps the government keep prices stable, and South Korea recently had to pull from its strategic cabbage reserve during peak kimchi season. But a crypto reserve would serve none of these functions. The ostensible idea is that stockpiling crypto could help “drive economic growth and technological leadership,” as a fact sheet for the executive order states. But unlike oil or even cabbage, crypto does not serve the core functioning of society. It’s a volatile, highly speculative asset with little proven real-world application that regular old U.S. dollars can’t already account for. It’s hard to think of anything that would be less useful for America to stockpile.“Strategic Bitcoin Reserve” is a lofty name for what Trump’s executive order actually has done: taking crypto the government already owns and counting it.
Over the years, the United States has seized crypto assets as part of criminal and civil proceedings. The current value of bitcoin alone is estimated to be $17 billion. Why Trump seems set on pushing forward with this idea isn’t hard to see. The mere existence of something called a crypto reserve could benefit the president. Trump himself has gone all in on the crypto industry of late—even releasing his own memecoin, $TRUMP. On Sunday, he previewed his executive order on Truth Social: “I will make sure the U.S. is the Crypto Capital of the World,” he wrote. “We are MAKING AMERICA GREAT AGAIN!”Many other powerful members of his administration have crypto ties. That includes David Sacks, a venture capitalist who is now Trump’s crypto and AI czar, and Commerce Secretary Howard Lutnik. (Sacks has said he sold all crypto holdings prior to the start of the administration; Lutnick has agreed to divest his business interests by mid-May.) Elon Musk has previously indicated that he owns crypto assets, but hasn’t publicly addressed possible conflicts of interest since the crypto reserve was announced. I reached out to Musk, the White House, and the Department of Commerce for comment but did not hear back.
... Any government that trades in crypto raises concerns about how the currency could be used. Because crypto transactions can be done anonymously, they provide an almost unparalleled mechanism for bribery and corruption. Investing in crypto doesn’t mean a nation is using the currency as an illegal backdoor, but the problem is the difficulty in knowing if it were.
Now that the president has created a crypto reserve, he will want crypto prices to keep rising—otherwise the stockpile will be worthless. Driving the prices higher would require a steady stream of positive news. But the good news is already drying up, it seems. Trump’s executive order did not go over well with crypto traders, who were hoping that the government would do more than shift around the coins it owns: The price of bitcoin plummeted immediately after the order was announced.Read more...