With bitcoin hitting its all-time high of $112,000 in May 2025, and President Trump’s ongoing vocal support for cryptocurrency, it is worth examining the establishment of a strategic digital asset reserve. Executive Order 14233, “Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile,” issued earlier this year, directed the secretary of the Treasury to establish offices to administer and maintain control of custodial accounts collectively known as the “Strategic Bitcoin Reserve” and the “United States Digital Asset Stockpile.” This article addresses arguments made for and against this policy.
Background
As noted in the executive order, the bitcoin reserve is being capitalized by bitcoin currently held by the Department of the Treasury that was forfeited as part of criminal or civil litigation or in satisfaction of a civil money penalty imposed by any executive department or agency. Other agencies are also tasked with evaluating their holdings and their ability to transfer any bitcoin to the strategic reserve. The executive order attempts to centralize custody and consolidate management of digital assets that are seized by different federal agencies. However, it does not specify which assets should be kept as part of the Digital Asset Stockpile, but the president in posts on his Truth Social account indicated that Ethereum, XRP, Solana, and Cardano could be included.
There are still many questions about how the Strategic Bitcoin Reserve will be implemented, including:
- The governance structure for the reserve.
- The procedures for how the digital assets will be stored, and how the U.S. will be permitted to buy and sell assets if necessary.
- What, if any, public disclosures may be needed as to what assets the U.S. holds.
- What sort of monitoring of asset management would be needed.
- How the reserve will interact with existing financial laws and regulations.
The creation of the strategic reserve aligns with the administration’s January 23, 2025, Executive Order 14178, “Strengthening American Leadership in Digital Financial Technology,” which signaled a shift in policy in favor of digital assets. EO 14178 revoked Biden-era executive orders dealing with digital asset regulation and set the stage for the president’s pro-cryptocurrency agenda and his goal of making America the “crypto capital of the world.” It aimed to clarify the digital asset regulatory environment, encourage digital asset innovation and use across industries, and created both the position of “crypto czar” and a presidential Working Group on Digital Asset Markets. It also promised to create a strategic bitcoin reserve; EO 14233 fulfills that promise. The current crypto czar, David Sacks, has stated that the strategic reserve will be like a “digital Fort Knox of cryptocurrency.”
EO 14233 creates offices in the Department of the Treasury that will administer and maintain custody of the reserve assets. It is notable that having strategic reserves of bitcoin is a policy that has been embraced by many private corporations, especially in the tech sector. Companies including Strategy (formerly MicroStrategy), Tesla, Block, Coinbase, along with high net worth investors and family offices, have announced large purchases of bitcoin with portions of their cash reserves as long-term investments and to diversify their assets. Further, many states have introduced legislation to create state-level reserves. Both Arizona and New Hampshire have passed such legislation. Other countries have also looked at creating digital asset reserves. El Salvador was the first to create a national bitcoin reserve in 2021. Among others, Switzerland, Poland, and Japan are all currently exploring establishing strategic bitcoin reserves.
Arguments in Favor of a Strategic Digital Asset Reserve
The fact that bitcoin is finite is one of the arguments used by proponents of a strategic reserve. Bitcoin’s protocol caps the total supply at 21 million coins. The thought is that because of bitcoin’s scarcity, it has the potential to hedge against inflation and currency devaluation, which typically happen with traditional cash reserves. Although there is a process required to do so, the amount of traditional U.S. currency in circulation can be infinitely increased. Increasing the money supply can lead to inflation.
Another argument in favor of the strategic reserve is that some people view bitcoin as a long-term investment that could help diversify treasury holdings and reduce overall risk. Some companies, particularly those in the technology or cryptocurrency space, may also invest in bitcoin to support the crypto ecosystem and demonstrate a commitment to technological advancement.
Arguments Against a Strategic Digital Asset Reserve
Opponents of the strategic reserve have raised arguments including that:
- Cryptocurrency is too volatile to hold in reserve because there are enormous swings in its value.
- The U.S. dollar is strong enough that a crypto asset reserve is unnecessary.
- Unlike the Strategic Petroleum Reserve—created after the 1974 oil embargo to store oil and prevent economic disruption from shortages—the public does not rely on the day-to-day use of bitcoin, so a similar strategic reserve isn’t justified.
Other criticisms point to the valuation of digital assets being based on speculation and hype rather than tangible utility, which again may be one reason for the dramatic swings in value. There are also many security and custody concerns with any cryptocurrency because hackers have targeted exchanges and wallets. Securing a large strategic reserve will require the creation of a robust governance system, policies, and procedures to minimize the potential for cyberwarfare and hacking.
While the executive order creates the reserve, there is still a great amount of regulatory uncertainty with cryptocurrency. There also is concern that the formation of the reserve creates conflicts of interest with the administration and that large government holdings could influence regulatory policy to favor increasing the value of the U.S. digital asset reserve. Moreover, although the U.S. may be seeking to promote cryptocurrency with the creation of a reserve, large government investments could also undermine the distributed nature of cryptocurrency. One of the goals of distributed finance and cryptocurrencies is to put governance matters and the powers they include in the hands of the blockchain. This allows cryptocurrency to avoid the need for large institutional intermediaries, along with their costs and influence on how traditional currency changes hands. Governmental players owning cryptocurrency may not affect the blockchain itself, but they can create laws that influence the ways cryptocurrencies are regulated, which could change the crypto ecosystem.
Next Steps
Regardless of where one stands on the issue of whether the United States should have a digital asset reserve, it will be interesting to watch the development of the Strategic Bitcoin Reserve and Digital Asset Stockpile. With some of the current uncertainties about how the program will be built out, there are likely to be fascinating discussions. Perhaps U.S. holdings of digital assets may even speed up the process of passing laws or creating regulations that clarify whether cryptocurrencies are commodities or securities.
