In his statement on the Truth Social network, Trump mentioned that a crypto working group, established following his inauguration in January, is advancing the creation of the reserve, fulfilling campaign promises made to crypto lobbyists.
Following the announcement, the value of the named currencies, including Bitcoin, surged after a period of decline.
This move precedes the first White House Crypto Summit on Friday and marks a significant shift in US policy concerning cryptocurrencies. The Biden administration had previously pursued a more restrictive stance on the industry due to concerns over fraudulent transactions. Trump, who was initially skeptical of cryptocurrencies during his first term, specifically criticized the Biden-era policies as “corrupt”.
Trump stated that the crypto reserve will revitalize the industry after years of attacks by the Biden administration and affirmed his commitment to making the US the global leader in crypto, asserting “We are making America great again”.
Here are the key points to understand about the new US crypto reserve:
What will the US crypto reserve include?
Initially, Trump mentioned that the reserve would comprise smaller currencies such as XRP, Cardano, and Solana. Later, he clarified that Bitcoin (BTC) and Ethereum (ETH) would be the core of the Reserve. The market reacted positively, with significant increases in the value of these coins.
During his campaign, Trump pledged aggressive support for cryptocurrencies. Following his election victory, the cryptocurrency market experienced significant growth, with Bitcoin reaching an all-time high. In January, the Trump administration launched their own meme coins, digital currencies without the financial or technological backing of actual cryptocurrencies.
What could be the aim behind a crypto reserve?
Governments increasingly view digital currencies as an alternative store of value and hedge against inflation, despite their volatility. Some countries use seized cryptocurrencies as legal tender. Switzerland, Brazil, Germany, Hong Kong, Poland, and Russia are considering creating crypto reserves. The US, with the largest cryptocurrency holding, influences the international perception and regulation of cryptocurrencies through its actions.
What other strategic reserves does the US hold?
The US primarily holds strategic oil reserves known as the Strategic Petroleum Reserve (SPR), consisting of hundreds of millions of barrels of crude oil stored for emergency use.
Do other countries have crypto reserves?
Only El Salvador, Central African Republic, and Bhutan treat cryptocurrencies as legal tender. Other countries hold cryptocurrencies seized through law enforcement, with the US possessing the largest amount globally. China, despite banning crypto transactions, holds a significant amount seized from criminal activities. The UK, Ukraine, Finland, and India also have reserves from seized cryptocurrencies.
