On Thursday, President Trump signed an executive order creating a Strategic Bitcoin Reserve, alongside a separate stockpile for other cryptocurrencies. The reserve will primarily consist of assets seized from criminal activities or through civil asset forfeiture.
Why it matters:
As the self-proclaimed “first crypto president”, Trump has now committed the U.S. government to long-term holdings of Bitcoin, the largest and most influential cryptocurrency in the market.
What we’re watching:
The market reaction has been sharp.
Shortly after the announcement, Bitcoin’s value plummeted by over $5,000 within an hour. This is a classic case of the “sell the news” phenomenon often observed in the crypto space. However, the market had already experienced a surge last Sunday when Trump hinted at adding other cryptocurrencies to the reserve.
What’s happening:
The government has decided to stop liquidating seized Bitcoin — both from previous and future operations — that were obtained from criminal activities or civil asset forfeiture cases.
Yes, but:
Typically, proceeds from the sale of seized assets are used to compensate victims or fund law enforcement initiatives. By holding onto these assets, the government is taking a different approach that may raise questions about its impact on victim restitution.
What they’re saying:
David Sacks, the White House’s lead for crypto and AI, clarified the financial impact of the move, stating: “This means it will not cost taxpayers a dime.” He made this statement on X (formerly Twitter).
According to Arkham Intelligence, the U.S. government already holds around $17 billion worth of Bitcoin. However, Sacks pointed out that an audit of the current holdings is still pending.
The executive order also directs the Departments of Commerce and Treasury to devise “budget-neutral strategies” to acquire additional Bitcoin, implying no direct use of taxpayer money for purchases.
The intrigue:
Sacks described the Bitcoin reserve as “a store of value” in his X post — just moments before Bitcoin’s value sharply declined.
Additionally, Sacks revealed that any future cryptocurrency obtained through forfeitures or seizures, excluding Bitcoin, may be added to a separate “Digital Asset Stockpile.” Unlike the Bitcoin reserve, the government does not plan to purchase additional assets for this stockpile, limiting it strictly to forfeited digital assets.
What’s next:
A major challenge now lies in determining how the government will manage custody and auditing for its rapidly growing cryptocurrency holdings. Developing a clear framework will be essential to ensure transparency and accountability.
The bottom line:
Sacks emphasized that taxpayers will not bear any financial burden for the government’s acquisition or retention of these crypto assets. The plan is centered entirely around utilizing forfeited assets to build the nation’s digital reserves.