The Downsides of a Strategic Crypto Reserve

Donald Trump proposed a “strategic reserve” at the Bitcoin Conference in Nashville in July, later expanding the concept to include Cardano (ADA), XRP, Solana (SOL), and Ethereum (ETH).
One might think that virtually all Bitcoin enthusiasts would be excited about the idea of the U.S. government acquiring Bitcoin (BTC) and recognizing it as a global asset. However, I find myself among a minority who view this proposal negatively for both Bitcoin and the U.S. government.

1. What is easily done is easily undone

If Bitcoiners desire a lasting reserve, they should advocate for Congressional authorization for acquisitions, rather than allow a unilateral decision by the executive branch, which could be reversed by future administrations.

2. The global reserve issuer should not disrupt itself

The potential Crypto Reserve raises uncertainty about its classification – as merely an investment fund or as part of a new commodity-based currency system.

3. The U.S. already has plenty of exposure to Bitcoin

American citizens collectively hold significant amounts of Bitcoin, benefitting the government through tax revenues without requiring direct exposure from the federal government.

4. There is no “strategic” value in a crypto reserve

Unlike essential commodities stockpiled for emergencies, there is no clear requirement for a reserve of Bitcoin, Cardano, or Ripple to support U.S. life quality.

5. A Crypto Reserve dilutes the value proposition of Bitcoin

Integrating Bitcoin with other cryptocurrencies diminishes its unique value and may confuse the public regarding its distinct merits.

6. Bitcoin does not need the government

Bitcoin has thrived without government backing and, bringing the government into the equation could politicize and undermine its value.

7. It would turn Americans against Bitcoiners

With a small percentage of Americans holding Bitcoin, using taxpayer funds to support cryptocurrency prices could lead to backlash against the crypto community.

8. It looks self-interested

Trump’s proposal may appear to prioritize his financial interests and those of his associates, undermining reasonable policy initiatives.

The discussion surrounding a strategic crypto reserve must consider these factors carefully. As the implications evolve, it remains critical to advocate for policies that support sustainable financial innovation without compromising the integrity of Bitcoin.