Author: Weilin, PANews
At 8 a.m. Beijing time on March 7, David Sacks, the White House's AI and Crypto Policy Director, announced on the X platform that U.S. President Trump has officially signed an executive order to establish a strategic BTC reserve and a digital asset reserve. However, as both reserves are mainly funded by "proceeds from criminal or civil asset forfeitures," the market reacted negatively in the short term, with the BTC price briefly falling below $85,000, down 4.21% in 24 hours, before recovering slightly.
It is reported that the presidential executive order is not a law, and its scope of effectiveness is limited. Some analysts point out that there may still be favorable legislation on a "strategic BTC reserve" in Congress in the future. At the same time, some industry insiders believe that the impact of the Trump effect on the market will gradually weaken, and the crypto industry will enter a new stage, with attention shifting back to the application layer.
Strategic BTC Reserve: Funded by Forfeited Assets, Implementing Audit and Budget-Neutral Strategies
David Sacks, the White House's AI and Crypto Policy Director, said in the statement: "This reserve will be funded by BTC held by the federal government, obtained through criminal or civil asset forfeiture proceedings. This means that taxpayers will not bear any costs."
He pointed out that the U.S. government is estimated to hold about 200,000 BTC, but a comprehensive audit has never been conducted before. This executive order requires a full audit of the federal government's digital asset holdings. The U.S. will not sell the BTC deposited in this reserve, but will use it as a store of value, similar to the "digital gold" version of Fort Knox in the crypto currency field.
In addition, Sacks mentioned that the premature sale of BTC has caused U.S. taxpayers to lose more than $17 billion in value. Now, the federal government will develop strategies to maximize the value of its held assets. The Secretary of the Treasury and the Secretary of Commerce have been authorized to develop budget-neutral strategies to acquire more BTC, provided that these strategies do not impose additional costs on U.S. taxpayers.
This executive order also establishes a U.S. Digital Asset Reserve, which includes digital assets other than BTC that have been forfeited in criminal or civil proceedings. The government will not make additional purchases for the reserve, and its sources will be limited to the proceeds of forfeiture proceedings. The goal of this reserve is for the Treasury Department to responsibly manage the government's digital assets.
In the closing of the statement, Sacks thanked President Trump for his efforts to establish the strategic BTC reserve and expressed gratitude to his government colleagues: "President Trump's commitment to creating a strategic BTC reserve and a digital asset reserve has now been fulfilled. This executive order underscores President Trump's commitment to making America the 'global crypto capital.' I want to thank the President for his leadership and vision in supporting this cutting-edge technology, as well as his effective execution in driving the development of the digital asset industry."
"I also want to thank the President's Digital Asset Market Working Group, especially Secretary of the Treasury Scott Bessent and Secretary of Commerce Howard Lutnick, who provided critical support in achieving this goal. Finally, Bo Hines, as the Executive Director of the Working Group, played a key role," he said.
Establishing Two Asset Holding Mechanisms, with a Strategic BTC Reserve Also Being Promoted in Congress
According to the division in this executive order, Trump's executive order has established two different digital asset holding mechanisms:
- 1. Strategic Reserve, which only stores BTC, with an initial funding source of about 200,000 BTC obtained by the government through years of criminal and civil forfeitures. Secretaries Bessent and Lutnick are authorized to explore ways to acquire more BTC without increasing the tax burden on taxpayers, positioning it as a national-level digital value reserve.
- 2. Digital Asset Stockpile, which includes digital assets other than BTC - possibly including XRP, ADA, ETH, and SOL, as well as other assets. The Treasury Department is responsible for "responsibly managing" the government's digital assets. The government will only explore budget-neutral ways to purchase more BTC, and will not actively seek to increase the number of other digital assets in the stockpile. The executive order also requires a comprehensive audit of all digital assets currently held by the government to ensure transparency in asset management.
In fact, as early as March 3, Trump had stated that the U.S. crypto strategic reserve would include XRP, Solana (SOL), Cardano (ADA), BTC, and Ethereum (ETH), and these assets may appear in the digital asset reserve required by this executive order. However, some industry insiders have questioned the inclusion of XRP and ADA, arguing that they lack the developer activity and decentralization characteristics of BTC and ETH.
In addition to Trump's executive order, the "Strategic Bitcoin Reserve" being promoted by Senator Lummis is also in the process of being advanced in Congress. Mint Ventures research partner Alex Xu wrote that this "Strategic Bitcoin Reserve," unlike Cynthia Lummis' "Strategic Federal Bitcoin Reserve" bill at the federal level, can be directly controlled by the government, while the latter requires congressional legislation. The former also does not have a separate budget for BTC purchases (which would require congressional approval if it wants to increase), while the latter will provide a separate budget for BTC purchases, with the goal of buying 1 million BTC in 5 years, possibly from the revaluation of the value of the U.S.'s existing gold reserves, thereby expanding the Fed's asset count to provide a budget for the Treasury Department to purchase BTC. David Sacks' statement that "the government will not acquire other assets for the reserve" does not mean that the widely perceived "strategic BTC reserve" has suddenly become something that only relies on forfeitures and does not spend money to buy BTC separately.
Market Reaction: BTC Price Drops Briefly Before Rebounding, Concerns About Increased Enforcement Efforts
Although the U.S. government claims it will develop budget-neutral strategies to acquire BTC, the statement also explains that the premise is that these strategies will not impose additional costs on U.S. taxpayers, which has disappointed market expectations, leading to pressure on the BTC price. Previously, the market had expected the U.S. might actively purchase more BTC to supplement the reserve. As of early morning on March 7, the BTC price briefly fell below $85,000, down 4.21% in 24 hours, before recovering slightly.
According to Arkham Intelligence data, the U.S. government currently holds about $18.28 billion in seized crypto assets, the majority of which are BTC, totaling 198,109 BTC, worth about $17.87 billion. In addition, the government holds $122 million in USDT and $119 million in ETH, while XRP, SOL, and ADA do not appear on the asset list.
Coinbase executive Conor Grogan posted on the X platform that "the U.S. government holds 198,109 BTC, and this executive order means that about $18 billion in selling pressure will be reduced."
However, Galaxy Digital research head Alex Thorn posted on X that "the maximum BTC balance available to the U.S. government for the strategic reserve is only 88,000 BTC, accounting for only 43% of the current government holdings. This is because of the 198,000 BTC currently held by the U.S. government, 112,000 BTC will be returned to Bitfinex."
Some market participants have a more pessimistic interpretation of this policy. Tech and crypto KOL @realwuzhe posted that "Trump just ordered the establishment of a national BTC reserve. But it's just about properly managing the BTC they've seized before, and ensuring they don't dump the market. They also emphasized that they won't use taxpayer money to buy new BTC. It's essentially a big headline with little substance, BTC crashed in response."
He expressed concerns about the U.S. government increasing its enforcement efforts. "The U.S. has now established a BTC reserve, but is not going to use taxpayer money to buy coins. Where will the new coins come from? It must be through continued law enforcement measures. Going forward, the U.S. will have a strong incentive to take enforcement action against overseas exchanges and large holders."
Crypto industry KOL Chen Mo said: "The implementation of the US strategic reserve, although it will not actively buy BTC, at least the purpose has been achieved in form, and it is not ruled out that other countries will buy. From the price reaction, it is not as good as the market expectation, it is expected that the Trump effect on the market will gradually weaken, and there will be fewer and fewer foreseeable events in the future, the crypto industry will enter a new stage, and attention should be paid to the application layer, in the next 1-2 years of compliance and regulatory relaxation, more opportunities can be created."
At the same time, Bitwise Chief Investment Officer Matt Hougan is also more optimistic, he analyzed that the executive order may have the following impacts:
- Greatly reduce the possibility of the US government "banning" Bitcoin in the future;
- Greatly increase the possibility of other countries establishing strategic Bitcoin reserves;
- Accelerate the process of other countries considering establishing strategic Bitcoin reserves, as this provides a short-term window for countries to get ahead before the US may further purchase Bitcoin;
- Make it more difficult for institutions to portray Bitcoin as a "dangerous" or "unsuitable to hold" asset - from national account advisors to quasi-governmental institutions like the International Monetary Fund (IMF).
On the first day of the executive order, several crypto industry executives will attend the "Digital Asset Summit" hosted by Trump in Washington, DC at around 3am Beijing time on March 8. Previously, Eaglebrook Advisors founder Mike Alfred posted on the X platform that "there are reports that the Trump administration is preparing to announce a zero capital gains tax policy on crypto asset sales (i.e. crypto asset sales will be exempt from capital gains tax) at the crypto currency summit on Friday."
