The idea of adding cryptocurrencies to the US national reserve has seen significant changes in recent years.
Initially, Bit (BTC) was almost the sole choice. As the first and widely recognized cryptocurrency, with a fixed supply of 21 million coins, Bit was seen by many as an ideal inflation-resistant hedge – a "digital gold" that the government could use to protect the economy from volatility.
However, there is an increasing view that Bit alone may not be enough. Some leaders in the finance and cryptocurrency industries are pushing the idea of expanding the US reserve to include XRP. This proposal has sparked a new, lively and in-depth debate.
This shift in approach raises questions about the future of digital assets in the national financial system, as well as their potential impact on the global economy. Like traditional reserve assets, the role of various cryptocurrencies in the national reserve will significantly influence monetary policy and international trade.
Bit was once considered a strong candidate for the Federal Reserve's (Fed) reserve assets due to its limited supply and decentralized nature. However, its high volatility and regulatory concerns have slowed the formal approval process.
When the idea of adding Bit to the US national reserve was first proposed, it was not without merit. Major corporations like MicroStrategy and Tesla have invested in Bit, seeing it as a strategic asset to protect against inflation.
The arguments in favor of Bit mainly revolve around three key factors: first, the fixed supply of BTC helps avoid the inflation issues of fiat currency; second, the decentralized nature ensures that no single entity can manipulate it; and finally, its sustained existence for 17 years has proven Bit to be a reliable store of value.
As of January 29, various US states are taking different steps to build strategic Bit reserves. Some states like Michigan and Wisconsin have made significant progress, even owning Bit through state-managed funds, although they lack formal legislative support.
While Bit has many advantages, its extreme volatility has quickly become a major obstacle. Governments typically avoid assets that can lose up to 50% of their value within a few months, and Bit's sharp price drops have made it a potentially risky choice.
The question arises: How would economists react if taxpayer money was used to purchase an asset that can depreciate so rapidly?
Additionally, the lack of regulatory certainty has also raised concerns about Bit. Although the US Commodity Futures Trading Commission (CFTC) has classified Bit as a commodity, there is still no clear legal framework to integrate this currency into the national reserve.
Furthermore, the debate around the massive energy consumption of Bit's PoW (proof-of-work) mechanism has sparked strong opposition. These factors have slowed the development process, causing policymakers and industry experts to rethink: Perhaps Bit alone may not be the optimal solution, and the US should consider a more diverse cryptocurrency reserve.
As skepticism towards Bit grows, discussions are shifting towards a more diverse cryptocurrency reserve, potentially including XRP and Ether (ETH).
Just as the idea of a Bit reserve faces many questions, an alternative is starting to take shape: Why limit the reserve to a single cryptocurrency? The current crypto market has thousands of digital assets, each serving a purpose and having unique characteristics.
Similar to how the US maintains a diverse reserve portfolio, including gold, foreign currencies, Special Drawing Rights (SDRs), and government debt, some suggest that the national cryptocurrency reserve should also follow a similar model. Instead of relying solely on Bit, a portfolio comprising XRP, ETH, and stablecoins could provide greater balance and flexibility.
However, considering historical price volatility, a Bit-only reserve may be more stable than diversifying into multiple cryptocurrencies. Finding the optimal balance between stability and growth potential remains a significant challenge for policymakers.
Brad Garlinghouse, the CEO of Ripple, shared:
"A few thoughts on maximalism... Let me be as clear as possible - the crypto industry has a real opportunity to achieve many shared goals, if we collaborate rather than attack each other. This is not and will never be a zero-sum game.
I hold XRP, BTC, and ETH, and some other tokens - we live in a multi-chain world, and I've always advocated for a level playing field rather than pitting one token against another.
If a government digital asset reserve is created, I believe it should represent the industry as a whole, rather than just a single token (whether that's BTC, XRP, or any other asset).
Maximalism remains a significant barrier to crypto's development, and I'm glad to see fewer people embracing this outdated and misguided mindset."
As of January 31, 2025, the United States' national reserves include more than 8,100 tons of gold, making it the largest holding of this asset. In addition to gold, foreign currencies play an important role in stabilizing exchange rates, while Special Drawing Rights (SDRs) issued by the International Monetary Fund (IMF) are a flexible financial instrument that helps adjust to global economic shocks. At the same time, U.S. government debt in the form of bonds and securities also contributes significantly to the national reserves.
The idea of a diverse Cryptoasset reserve follows this logic, aiming to help the government mitigate financial risks while still integrating assets that serve different purposes.
In this context, XRP emerges as a notable choice. Unlike Bit, often seen as a long-term store of value, XRP is designed to optimize transaction speed and efficiency. It is particularly suitable for cross-border payment transactions, with transaction processing times of only 3-5 seconds and low transaction fees.
If the national Cryptoasset reserve aims to support liquidity and global commercial transactions, especially government-backed cross-border transactions, XRP could be a strong candidate. While adding XRP to the reserve may increase the volatility of the total reserves, it is still considered a well-established asset that has weathered many market cycles and reflects a sustainable, reliable payment infrastructure.
The fast processing speed, low transaction costs, and ability to integrate with the banking system make XRP an attractive choice for a government-backed digital reserve.
Arguments in favor of including XRP in the U.S. Cryptoasset reserve include:
Key barriers to XRP include legal issues, concerns about centralization, and market liquidity.
Despite many benefits, the inclusion of XRP in the national reserve faces significant obstacles, such as:
Political and industry opposition further complicates the matter. Bit maximalists like Jack Mallers and Michael Saylor argue that Bit should be the sole Cryptoasset in the national reserve, emphasizing its stability and decentralized nature as a long-term store of value. This view is clearly reflected in efforts to promote Bit as an irreplaceable choice.
Meanwhile, there are rumors that Ripple is actively lobbying against the idea of a reserve consisting solely of Bit, further fueling the debate on this issue. Could the U.S. government one day hold Bit as a store of value and XRP as a transaction tool? This is entirely possible, but for now, the debate continues to rage, and XRP remains one of the most "controversial" choices in the Crypto community.
The way regulators shape the market and the level of acceptance of Cryptoassets by institutions will determine whether XRP and other digital assets can be included in the U.S. national reserve. This decision will not only impact the future of XRP but also how the U.S. positions itself in the global Cryptoasset economy.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.
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