Aug 6 2024: “Never sell your bitcoin,” Donald Trump declared to an enthusiastic crowd at a crypto convention in Nashville, Tennessee, in late July. The Republican presidential candidate’s speech highlighted his effort to attract crypto-focused voters ahead of the November election and included a plan for a national bitcoin reserve.
“If elected, my administration will ensure that 100% of all bitcoin held or acquired by the U.S. government is kept as part of a strategic national bitcoin stockpile,” Trump said, outlining his vision for the reserve.
Trump’s proposal aligns with similar ideas from other politicians. U.S. Senator Cynthia Lummis has introduced legislation advocating for the U.S. government to purchase one million bitcoins, or about 5% of the total supply. Independent candidate Robert F. Kennedy Jr. has proposed a government stockpile of four million bitcoins.
The U.S. government currently holds a substantial amount of cryptocurrency, valued at around $11.1 billion, including 203,239 bitcoins, according to Arkham Intelligence. This stash largely originates from criminal seizures, such as those from the now-defunct Silk Road marketplace. At present, the U.S. holds approximately 1% of the global bitcoin supply, which totals about 19.7 million tokens out of a capped 21 million.
For comparison, major non-state investors include Michael Saylor’s MicroStrategy, which owns about 226,500 bitcoins, and investment funds like BlackRock’s iShares Bitcoin Trust and Grayscale Bitcoin Trust, which hold 344,070 and 240,140 bitcoins, respectively.
The idea of a government bitcoin reserve could potentially bolster bitcoin’s price. “It would positively impact the price because we’d see a new state of reserve asset for such a limited supply commodity,” said Mark Connors, head of global macro at Onramp Bitcoin.
However, a reserve could also reduce the number of bitcoins available for trading, potentially impacting market liquidity. “RFK’s plan to hold 19% of the bitcoin supply, akin to the gold reserve, might not sit well with many bitcoin enthusiasts,” Connors noted.
Other countries also hold significant bitcoin reserves, with China being the second-largest government holder at 190,000 coins, according to BitcoinTreasuries.
‘A LOT TO FIGURE OUT’
While the concept of a national bitcoin reserve remains uncertain, crypto experts are speculating about its possible structure. Connors suggested that the Federal Reserve might manage the reserves for the Treasury Department, similar to its role with gold. Conversely, Frank Kelly, senior political strategist at DWS Group, proposed that the reserve could operate more like the Strategic Petroleum Reserve, with oversight shared between the president and Congress.
There is an inherent irony in the idea of a decentralized digital asset becoming part of a state reserve, which contrasts with the ethos of many bitcoin advocates.
Despite the uncertainty, many in the crypto industry view the increased political attention as a positive development. “There’s a general sense that both parties are paying more attention to digital assets,” said Raoul Mewawalla, CEO of Mawson Infrastructure Group, which runs data centers for bitcoin mining. “The expectation is that this focus will persist after November.”