Nick Carter stated that the five-cryptocurrency reserve plan proposed by Trump dilutes the value proposition of Bitcoin and has an obvious self-interest motive.
One might think that almost all Bitcoin supporters would be excited about the idea of the U.S. government acquiring Bitcoin (and perhaps other crypto-assets) and see it as effectively confirming Bitcoin's status as a globally important asset. However, I am one of the few who do not believe this development is beneficial for Bitcoin or the U.S. government itself. Here are eight reasons why I do not support this policy.
Easy to do, easy to undo
If Bitcoin supporters want the reserve to be sustainable, they should hope that Trump seeks Congressional authorization for the purchases (which is standard practice for any large expenditure). If it is executed solely by executive order, the next administration will not feel bound by the policy and could easily reverse it (and potentially destroy the market in the process). If Bitcoin supporters genuinely believe that U.S. acquisition and long-term holding of Bitcoin is beneficial to it, they should insist that the government authorize the reserve expenditure through legislation, rather than letting Trump unilaterally execute the policy.
Many Bitcoin supporters hope that Trump will execute the policy without seeking Congressional approval, suggesting they are chasing a short-term market pump rather than truly caring about the long-term significance of the reserve for the U.S.
The issuer of the global reserve currency should not self-destruct
The U.S. is the issuer of the global reserve currency. We are still unclear on how the crypto reserve would be positioned - merely as an investment fund, or as some new commodity currency system tied to the dollar, like the old gold standard.
If the crypto reserve is seen as providing new backing for the dollar, I believe this would cause major instability in the dollar and Treasury markets. Effectively, the government would be signaling that it no longer believes in the current dollar system and needs a fundamental change. I think this would lead to already high interest rates continuing to rise, as the market starts to doubt whether the U.S. is considering defaulting on its debt. The government should focus on bolstering investor confidence in its ability to meet its debt obligations through policies that promote growth and reduce deficits, not recklessly tinker with the entire structure of the dollar system.
Many Bitcoin supporters do not share this logic and just want to accelerate the collapse of the dollar. I view this as a form of financial terrorism. I do not believe in financial accelerationism, nor do I think Bitcoin - or any other crypto-asset - is ready to serve as the new commodity standard for the dollar.
The U.S. already has a large Bitcoin exposure
U.S. funds and individuals hold more Bitcoin than the citizens of any other country - almost certainly by a wide margin. The U.S. government has already benefited from this situation. When Bitcoin rises, those Americans who realize gains have to pay taxes to the government - at a rate of 20% or 40%, depending on how long they have held their positions.
This is an important point worth noting. As Bitcoin rises, the U.S. is already realizing gains through taxation - more than any other country. Given this, do we really need to pick a huge fight to insist that the U.S. government hold these assets directly? No one is pushing for the U.S. government to acquire stocks in Apple or Nvidia. Why Bitcoin?
The crypto reserve has no "strategic" value
Typically, assets and commodities acquired at the U.S. government level are things that may be needed in emergencies and must be stockpiled in advance. The strategic petroleum reserve is a good example, as oil is clearly a critical commodity that we may not be able to access in a crisis.
We also maintain other types of strategic asset reserves, such as medical supplies and equipment, rare earth minerals, helium, metals like uranium and tungsten, and agricultural commodities. All of these have clear and obvious purposes: they can be drawn upon in emergencies.
We also hold foreign exchange reserves in case we need to intervene in currency markets, although such interventions are becoming less common. Bitcoin (and Cardano or XRP, for that matter) has no obvious strategic use. Ordinary Americans do not need Bitcoin or any other crypto-asset to support their standard of living. If the entire financial system were running on a blockchain, we would need these tokens as "fuel" (the only similar "industrial" use I can think of), but that is not the case currently. The only "strategic" use of Bitcoin (or any other crypto-asset) is to "go long" on the asset at the national level and then sell it, but you can achieve that with any other financial asset. In that regard, Bitcoin (or any other crypto-asset) is not unique.
Of course, if the ultimate intention is to use Bitcoin to back the dollar, forming some new gold standard-like system, then it would have strategic value (in which case, you should refer to the second point). But I don't believe that is the current intent.
The crypto reserve dilutes Bitcoin's value proposition
Mixing Bitcoin with competing crypto-assets like Ethereum, Cardano, Solana, and XRP, and giving them equal government endorsement, will devalue Bitcoin and make it appear indistinguishable from these other assets. Bitcoin is the only asset with a credible supply schedule and true decentralization at the protocol level. The crypto reserve blurs this distinction and devalues Bitcoin in the public eye. Principled Bitcoin supporters should push for an all-or-nothing approach; either just Bitcoin, or no reserve at all.
Bitcoin doesn't need the government
I wonder how the early libertarian Bitcoin supporters of 2012-2016 would view Bitcoin supporters in 2025 pushing for government backing of their coin's value. Beyond the confusing ideological evolution the Bitcoin community has undergone, there is another issue. Bitcoin has gone from zero in 2009/10 to becoming one of the best-performing investments in history, with a total value in the trillions of dollars, by 2025. It has achieved this without government support, and in fact often in the face of open hostility from powerful states. The crypto reserve would transform Bitcoin from a non-political asset into a plaything of the government, subject to the whims of the Washington political cycle. Bitcoin supporters have never tied their fate to the government, and they shouldn't start now.
This will make Americans oppose Bitcoin supporters
Only a small fraction (around 5%-20%) of Americans own Bitcoin, and even fewer own other crypto-assets. Many Bitcoin supporters are very wealthy due to their historical investments. In a period of scrutiny over government spending, using taxpayer funds - however allocated - to prop up the prices of Bitcoin and other crypto-assets will be politically unpopular. While Biden's proposed student loan forgiveness may benefit 43 million borrowers, it has still faced strong opposition. The Bitcoin supporter community is smaller and less in need of government fiscal support. This policy will undoubtedly generate unnecessary resentment towards the crypto community in the broader society.
It looks self-serving
It is no secret that Trump and his inner circle and associates hold various crypto-assets. Trump himself has launched or been involved with an Ethereum-based NFT project, multiple Solana-based meme coin projects, and of course World Liberty Financial, which holds a range of crypto-assets. What we need is for Trump to formulate a reasonable crypto policy, and based on his appointments at Treasury, Commerce, the SEC, CFTC, and OCC, he appears to be moving in that direction.
However, using government resources to directly increase the value of the crypto-assets held by Trump (and many around him) makes one uncomfortable. Most of us in the crypto industry just want reasonable policies and fair rules so we can operate businesses in the U.S. Trump's proposal goes far beyond that, planning to use taxpayer money to directly speculate on these coins, potentially benefiting himself and his associates.
For Trump's critics, this appears to be a corrupt act. It also makes the rest of Trump's pro- policies and regulatory efforts appear to be self-serving, rather than existing as good policies on their own. Future governments may choose to "throw the baby out with the bathwater" and undo all of the progress the US has made in the space. The existence of the reserves provides an easy moral justification for future retrogressive measures.
