Article reprint source: Vernacular Blockchain
Author | Mu Mu
Produced by｜Baihua Blockchain
Since the "finality" of Trump's victory in early November, the crypto market, especially Bitcoin, has entered a strong expectation of "US Bitcoin strategic reserve". Obviously, the market will focus on the implementation of this promise after Trump takes office in 2025. Some analysts bluntly stated that this will break the bull-bear cycle of Bitcoin, that is, any "episode" in the future may cause turbulent market conditions. What we can do now is to pay attention to its progress, estimate the possible landing time nodes in advance, and make corresponding preparations.
01. Latest Developments
The matter of the 'Bitcoin Strategic Reserve' was actually proposed and discussed before the U.S. presidential election, with Senator Cynthia Lummis proposing the (Bitcoin Strategic Reserve Act of 2024) on July 31, 2024, which suggests purchasing 200,000 Bitcoins annually to reach 1 million within five years.
Subsequently, during the campaign, Trump promised to become the 'crypto president' during his speech at the Bitcoin conference in the crypto industry, and the industry hopes he fulfills his promise by creating a Bitcoin inventory through executive orders to ensure that the industry can access banking services and establish a cryptocurrency committee.
On December 17, 2024, the Bitcoin Policy Institute (BPI) (note: an unofficial organization, but a non-profit organization focused on Bitcoin policy research, still one of the important think tanks for policymakers on Bitcoin-related issues) recently publicly released a draft of an executive order, attempting to provide reference suggestions for the framework of Trump's 'Bitcoin Strategic Reserve' executive order. This draft explicitly suggests: recommending the use of 1%-5% of Treasury bond assets to purchase Bitcoin to form a long-term reserve. Led by the Treasury, in collaboration with the Federal Reserve, gradually establishing reserves, etc.
On December 19, 2024, Federal Reserve Chairman Powell (expected to continue serving his term after Trump's inauguration) expressed cautious views at a press conference, stating that the Federal Reserve has no intention of participating in any government accumulation of Bitcoin, as such matters fall under Congress's responsibilities, and the Federal Reserve has not sought to change existing laws to allow holding Bitcoin.
From the latest situation, although the Federal Reserve Chairman holds a conservative opinion, under favorable conditions such as the nomination of a crypto-friendly U.S. Treasury Secretary by Trump and the rapid issuance of 'presidential executive orders', these will not affect Trump's team’s continued push to include Bitcoin in the U.S. strategic reserves plan.
02. Earliest Implementation Time
Given that the 'Bitcoin Strategic Reserve' is not a small topic and cannot be executed immediately just because the U.S. president feels like it, we will not see its implementation right away. Based on the current U.S. administrative orders or legislative processes, if Trump wants to implement the Bitcoin strategic reserve matter, he must immediately have the cryptocurrency committee conduct policy research and feasibility assessment after taking office, formally propose a plan upon completion, and then proceed through two paths:
Path One: Presidential Executive Orders (earliest in the second half of 2025)
Issuing executive orders directly after Trump takes office is the quickest path, as it can bypass resistance from conservative and opposing forces such as the Federal Reserve and Congress. It also references the draft provided by the 'Bitcoin Policy Institute', directing the U.S. Treasury Department to use the Foreign Exchange Stabilization Fund (ESF) to directly allocate Bitcoin.
However, although this method is quick and convenient, it also has side effects. The Treasury's Foreign Exchange Stabilization Fund, while not needing congressional approval, can be investigated and legislatively restricted by Congress. Executive orders can also be overturned and modified by the next president, so their durability and stability are not as good as legislation.
Path Two: Congressional Legislation (earliest in the second half of 2026)
If a more stable legislative path is taken, it will require a longer process. The bill, after policy research and feasibility assessment by the cryptocurrency committee, needs to be submitted to Congress and reviewed by the Senate Banking Committee, and then pass through the Senate, House of Representatives, and be signed by the president before it can be officially legislated.
This process may experience various back-and-forths and be relatively complex, as many conservative lawmakers will definitely raise objections and obstruct, thus although this path can achieve a lasting and stable bill, it will take a long time, at least it may be realized between the second half of 2026 and 2027.
Recently, news has emerged that the crypto industry is pushing Trump's team to issue executive orders on his first day in office next month, launching his promised cryptocurrency policy reform to help promote the mainstreaming of cryptocurrencies. If implemented through executive orders, it may be possible to see the Bitcoin strategic reserve come to fruition as early as mid-2025.
03. Several Important Time Points
During the 'process' of relevant executive orders or bills related to the Bitcoin Strategic Reserve, the following time points may significantly impact the market:
1) January 20, 2025, around Trump's inauguration
Trump will officially take office on this day, and from this time, he will be able to officially start 'issuing orders'. This time point will mark the beginning of the new president's administration, and related policy directions may gradually emerge. The market will pay close attention to the inaugural speech and the release of early executive orders. Many guests are expected to attend the inauguration, which will likely be quite lively, and the financial market will also pay close attention.
2) By mid-2025, complete the policy research phase.
Based on the timeline, the cryptocurrency committee's policy research will be completed and a feasibility report and draft regarding Bitcoin reserves will be proposed as soon as mid-2025. Subsequently, Trump can sign the executive order, marking the official introduction of the 'Bitcoin Strategic Reserve'.
3) From the second half of 2025 to early 2026, implementation details and potential congressional tug-of-war.
Signing relevant executive orders and determining the relevant framework, the U.S. Treasury Department, the Federal Reserve, and other relevant departments will need to start developing specific implementation details, including methods of Bitcoin procurement, reserve ratios, asset management rules, etc., and then begin formal implementation.
During this period, it should not be too smooth, as congressional opposing lawmakers will join the ranks of obstruction and back-and-forth.
Finally, if everything goes smoothly and the Bitcoin reserve strategy brings objective 'benefits', it may further promote legislation in the future, which would have a profound impact on the crypto market landscape.
04. Summary
The 'Bitcoin Strategic Reserve' path seems full of twists and turns, and it is not something that can be implemented in a day or two; the earliest it could happen is in six months. However, regardless, Trump's 'U.S. Bitcoin Strategic Reserve' has brought good expectations while also 'setting a template' for central banks, financial institutions, and listed companies in various countries to research and explore the feasibility of Bitcoin reserves. Although there may still be many uncertainties regarding policy details and the final implementation timeline, we still need to follow and monitor key time points and make responsive adjustments as needed.
