President Trump signed an executive order establishing a Strategic Bitcoin Reserve (SBR). This means the US government will hold Bitcoin as an asset. The twist? The initial funding comes from Bitcoin already seized by the government, so no taxpayer money is directly used.
Market Reaction and Speculation
The market’s reaction was initially negative. The price of Bitcoin dropped significantly because many investors expected the US to buy Bitcoin on a massive scale immediately. The executive order didn’t announce this, at least not yet.
However, the order did mention exploring “budget-neutral” strategies for buying more Bitcoin. This sparked intense speculation on how the government could do this without spending taxpayer money.
Potential Funding Sources: A Trillion-Dollar Strategy?
Several experts weighed in on possible funding methods. One prominent figure, David Bailey (a former Trump administration insider), suggested a potential “trillion-dollar” strategy:
- $39 Billion: Surplus funds from the Exchange Stabilization Fund (ESF).
- $160 Billion: From selling Special Drawing Rights (SDRs).
- $800 Billion: From revaluing gold certificates.
This combined approach, Bailey argued, could provide the funds for massive Bitcoin purchases without increasing the deficit.
Other Budget-Neutral Options
The Bitcoin Policy Institute (BPI) also proposed some ideas:
- Using ESF Surplus: The ESF currently has around $39-40 billion in surplus funds that could be used immediately to buy Bitcoin. This wouldn’t require Congressional approval.
- Revaluing Gold: A proposed act of Congress (similar to Senator Lummis’s BITCOIN Act) could revalue gold reserves, providing additional funds for Bitcoin purchases.
One commentator, Bit Paine, suggested the administration already has a plan in place, pointing to Commerce Secretary Howard Lutnick’s significant Bitcoin holdings and investments in MicroStrategy (a company with large Bitcoin holdings).
Congressional Action: A Necessary Step?
While the executive order allows for budget-neutral Bitcoin purchases, some believe Congressional action is still needed to solidify the strategy. Congressman Nick Begich, a Bitcoin supporter, hinted at upcoming legislation in collaboration with Senator Lummis. They’re planning a private event to discuss Bitcoin’s role as a strategic reserve asset.
At the time of writing, Bitcoin was trading at $89,785.
