1. Legal and Policy Foundations
Executive Order: On March 6, 2025, Trump signed the (Executive Order to establish a strategic Bitcoin reserve and U.S. digital asset reserve) (number not disclosed, but continues the executive order he signed on January 23 to 'Strengthen U.S. Leadership in Digital Financial Technology', EO 14178). This order formally initiates the reserve program.
Managing Agency: The U.S. Department of the Treasury is responsible for establishing and managing the reserves, and Treasury Secretary Scott Bessent must submit a legal and investment assessment report within 60 days (by May 5).
Goal: To position Bitcoin as 'digital gold' as a national strategic asset aimed at enhancing financial resilience, hedging against inflation, and consolidating the U.S. position in the global financial system.
2. Reserve Composition and Funding Sources
Initial Assets:
Entirely sourced from Bitcoin obtained by the federal government through criminal or civil forfeiture proceedings.
Current holdings: Approximately 198,109 bitcoins (about 0.94% of the global total of 21 million), valued at about $17.6 billion (based on the morning price of $89,200 per coin on March 7).
Sources include cryptocurrencies seized during law enforcement actions, such as assets confiscated from dark web markets like Silk Road.
No new procurement involved:
Current policy explicitly states that taxpayer funds will not be used or new bitcoins purchased through open markets.
This contrasts with Senator Cynthia Lummis's (BITCOIN Act) (which proposes purchasing 1 million bitcoins within 5 years), which has not yet been passed by Congress.
Future possibilities: The executive order does not rule out future legislative authorization to purchase more bitcoins, but the funding sources need further clarification.
3. Reserve Structure
Strategic Bitcoin Reserve:
Only includes Bitcoin as the core asset.
Metaphorically referred to as 'Digital Fort Knox', symbolizing long-term value storage.
Policy stipulations: Bitcoins deposited into the reserves cannot be sold unless specific legal conditions are met (such as restitution to crime victims or law enforcement purposes).
U.S. Digital Asset Stockpile:
Includes other digital assets such as Ethereum (ETH), Ripple (XRP), Solana (SOL), and Cardano (ADA), with specific quantities not disclosed.
Management is more flexible, allowing the Treasury to conduct 'responsible management' based on market conditions, but similarly limited to forfeited assets.
Custodial Methods:
The Treasury will establish a dedicated digital wallet or cold storage system, employing multi-signature technology to ensure security.
Blockchain monitoring and independent audit mechanisms may be introduced to enhance transparency.
4. Implementation Timeline
Initiation: The Treasury will immediately establish reserve accounts after the executive order takes effect on March 6, 2025.
Agency Coordination: Federal agencies must review their held bitcoins and report to the Treasury within 30 days (by April 5), transferring them to the reserve accounts.
Assessment Phase: The Treasury must submit a detailed report by May 5 covering account location, legal requirements, and long-term management strategies.
Summit Clarification: The White House crypto summit on March 7 is expected to announce more details, and Trump may formally announce the implementation plan.
5. Specific Restrictions and Rules
No-sale Policy: Bitcoins in the strategic Bitcoin reserve cannot be sold, aimed at long-term holding.
Exceptions:
Returned to identifiable crime victims.
For law enforcement actions (such as paying informants or recovering assets).
Fair sharing with state and local governments.
To meet specific legal requirements (such as 31 U.S.C. 9705).
Other digital assets: The Treasury may manage U.S. digital asset reserves at its discretion, but will not exceed the scope of forfeiture.
Freeze period: The summit may discuss whether to set a 4-year selling moratorium (in line with Trump's term), but the executive order does not explicitly mention this.
6. Technical and Security Measures
Storage: A combination of physical and digital infrastructure may include offline cold storage and multi-verification systems.
Transparency: Plans to implement quarterly transaction reports and public reserve balances, with specific mechanisms to be confirmed at the summit.
Risk Management: No specific hedging measures against Bitcoin's price volatility have been observed, but may be proposed in future assessments.
7. Market and Policy Implications
Market Reaction:
After the news on March 6, Bitcoin's price fell by 5% to $85,000 before recovering to $89,200, reflecting market disappointment over the 'no new purchases' policy.
On March 2, when Trump mentioned the reserve plan on Truth Social, XRP, SOL, and ADA surged by 60%, indicating the market's sensitivity to policy expectations.
Industry Feedback:
Supporters (such as Michael Saylor of MicroStrategy) view this as a milestone for Bitcoin legalization, potentially bringing long-term economic benefits to the U.S.
Critics (such as Charles Edwards of Capriole Investments) call it a 'rebranding', merely renaming existing assets without providing substantial stimulation.
Global Impact:
May trigger other countries (like Russia and Germany) to follow suit by establishing similar reserves.
If future purchases become proactive, it may trigger a global 'Bitcoin arms race', driving prices higher.
8. Comparison with Other Proposals
Cynthia Lummis's (BITCOIN Act):
Proposal: Purchase 200,000 bitcoins annually over 5 years, totaling 1 million (about 5% of global supply).
Funding sources: Profits from Federal Reserve Bank deposits and gold holdings.
Difference: Current policy does not involve purchases, only utilizes existing assets.
State-level reserves: Strategic Bitcoin reserves proposed by states like Texas (SB-21 proposal) allow state governments to actively invest, which is more aggressive than federal policy.
Summary
The U.S. strategic Bitcoin reserve is currently a 'passive' program based on existing forfeited assets (approximately 198,109 bitcoins), valued at about $17.6 billion, more symbolic than a direct market driver. Its core is to establish Bitcoin's national strategic status through a no-sell policy, but the lack of new purchases disappointed some investors. The White House crypto summit on March 7 may further clarify future directions (such as tax incentives or regulatory frameworks) and may have indirect effects on the crypto policies of countries like China.