Why did Trump just establish a crypto strategic reserve?

Trump Establishes US Bitcoin Reserve in Executive Order

President Donald Trump has signed an executive order to create a strategic reserve for Bitcoin, making the United States one of the few nations to establish a national stockpile of digital assets.

According to White House AI and crypto advisor David Sacks, the reserve will consist of cryptocurrency seized by the federal government through criminal or civil proceedings. Unlike other assets, Bitcoin in this reserve will not be sold but rather retained as a government-held asset.

El Salvador pioneered the idea of a national Bitcoin reserve in 2021, and countries such as Brazil, Japan, and Switzerland have considered similar initiatives.

Trump, who previously dismissed Bitcoin as a "scam" four years ago, recently announced his ambition to position the US as "the Crypto Capital of the World." Additional details on this initiative are expected during the first-ever White House crypto summit, which Trump will host on Friday.

It remains uncertain whether legal challenges or congressional approval will be necessary for the reserve’s implementation.

Sacks described the Bitcoin reserve as a "digital Fort Knox," referencing the Kentucky facility that secures a substantial portion of the US gold reserves. The executive order also mandates the creation of a broader digital asset stockpile to include other forfeited cryptocurrencies. Additionally, it calls for a comprehensive audit of the federal government’s crypto holdings, which Sacks estimates to include around 200,000 Bitcoin—valued at $17.5 billion at current prices.

Although it is unclear how the new reserve will directly benefit American citizens, Sacks assured that it "will not cost taxpayers a dime."

The market responded swiftly to the announcement, with Bitcoin's price dropping by over 5% following Sacks’ clarification that the government would not purchase Bitcoin for the reserve.

Many countries maintain strategic reserves of key national resources to diversify holdings and mitigate financial risks. The US, for instance, has a petroleum reserve, while Canada maintains a stockpile of maple syrup.

Earlier this week, Trump also named five cryptocurrencies—Bitcoin, Ethereum, XRP, Solana, and Cardano—that he would like to see included in the reserve. Following his statement, the value of these digital assets surged.

Trump has actively courted the crypto community, in contrast to former President Joe Biden, who took a stricter stance on cryptocurrency due to concerns over fraud.