To have identity or to seek profit? Centralized or decentralized?
Written by: imToken
Starting in 2024, digital assets such as BTC gradually enter the mainstream view, becoming an important topic for institutional investment and cultural discussion. Moreover, with the listing and issuance of Bitcoin spot ETFs in the U.S. securities market, the holdings of institutions and enterprises have also rapidly increased, further strengthening BTC's role as "digital gold."
Supporters generally believe that BTC can become a powerful inflation hedge, with its hedging ability comparable to gold. At the same time, as time goes on, BTC will appreciate significantly, and more financial institutions will accept it as a means of storing value.
In the 2024 U.S. election, Republican presidential candidate Trump publicly expressed support for the crypto industry and proposed the idea of "establishing a BTC National Reserve," bringing BTC to the forefront of public attention and igniting expectations for the future of the crypto market.
Now, with the general election campaign for the U.S. presidential election having reached a phase, can Trump's compelling plan to "establish a BTC National Reserve" turn ideals into reality?
Reflecting on the Concept
U.S. Republican Senator Cynthia Lummis from Wyoming is an active advocate for digital asset development and criticizes the U.S. Securities and Exchange Commission's strict enforcement strategies against the crypto industry. In July 2024, Cynthia Lummis also proposed a bill related to BTC assets, the core content of which includes:
Proposing the establishment of a decentralized BTC storage facility network managed by the U.S. Department of the Treasury (commonly referred to as the BTC Vault).
Proposing that the U.S. government acquire up to 200,000 BTC each year for the next 5 years, which would bring the U.S. government's BTC reserves to 1 million BTC, accounting for about 5% of the total BTC supply.
Proposing that the U.S. government hold the aforementioned BTC for at least 20 years, and these BTC can only be specifically used to repay U.S. debt. Within 2 years of the implementation of the bill, the proportion of BTC sold by the U.S. government cannot exceed 10%.
Proposing to reassess Gold Certificates, adjusting the value of the gold certificates held by the U.S. Federal Reserve System to their actual market value to genuinely enhance asset value and provide funding support for the government's acquisition of BTC.
In retrospect, the BTC bill proposed by Cynthia Lummis seems to be in line with Trump's proposed "establish a BTC National Reserve" plan. After Trump won the general election, Cynthia Lummis also publicly expressed her excitement on social media.
Current Progress
On October 25, 2024, Pennsylvania passed the (Bitcoin Rights Bill) (Pennsylvania House Bill 2481) with a vote of 176 in favor and 26 against, creating a new milestone in digital asset regulation.
The core provisions of the (Bitcoin Rights Bill) include: individuals and enterprises have the right to self-custody of digital assets, operate blockchain nodes, and conduct transactions without interference from restrictive municipal regulations.
This bill was initiated by U.S. Republican Congressman Mike Cabell and received bipartisan support, reflecting the increasing recognition of the potential for blockchain technology reform by various parties. However, according to media platform Forbes, all 26 opposing votes for the (Bitcoin Rights Bill) came from Democratic representatives, but well-known members of the Democratic Party supported the passage of the (Bitcoin Rights Bill) and emphasized its potential to stimulate economic growth and contribute to enhancing financial inclusivity.
Following the passage of the (Bitcoin Rights Bill), U.S. Republican Congressman Mike Cabell, along with another Republican Congressman Aaron Kaufer, proposed the (Bitcoin Strategic Reserve Bill) (Pennsylvania House Bill 2664) on November 14, 2024. The core proposal of this bill is to allow the Pennsylvania State Treasurer to allocate 10% of the general fund, emergency fund, and state investment fund for the purchase of BTC and trading products from digital asset exchanges, echoing Trump's proposed BTC National Reserve Plan.
According to reports from media platform Decrypt, if the aforementioned bill passes, Pennsylvania's acquisition scale for BTC could reach as high as $970 million.
△ Source: Trump Digital Trading Card #10004
Possible Future
In addition to the BTC National Reserve Plan proposed during the election phase, after winning the presidential election, Trump's team has publicly announced supportive policies related to the crypto industry, including:
🔹 A position will be established in the White House responsible for digital asset policy. Reports from Bloomberg have indicated that Trump intends to appoint a "Crypto Asset Czar." Currently, it is unclear what budget, team, and regulatory powers this government position will have, but as an internally appointed position within the U.S. government, it is speculated that the primary functions of this position will focus more on political affairs rather than directly participating in policy-making; the officer in this position is more likely to become a liaison between federal regulatory agencies and the outside world.
🔹 Supporters of Trump, entrepreneur Elon Musk and Vivek Ramaswamy, will jointly lead the proposed "Department of Government Efficiency" (abbreviated as DOGE, sharing the name with the digital asset supported by Elon Musk) after Trump assumes the presidency. This aims to provide advice and guidance from outside the government, promote large-scale structural reforms, and create unprecedented entrepreneurial methods within the government.
Although the "Department of Government Efficiency" does not involve reforms to the crypto industry, after the announcement of its establishment on November 12, 2024, the digital asset DOGE, sharing the same name as the "Department of Government Efficiency," saw its market value surge, reaching a recent peak value of approximately 56% compared to the market value the day before the announcement.
Outside of political activities, after winning the presidential election, Trump's business group has also been active in the crypto market:
🔹 According to reports from the (Financial Times), Trump's company Trump Media and Technology Group is considering acquiring the digital asset trading platform Bakkt launched by the parent company of the New York Stock Exchange, Intercontinental Exchange.
The digital asset trading platform Bakkt is closely linked to Trump's political campaign experience. Bakkt's first CEO was Kelly Loeffler, who was later appointed as a U.S. Senator. She is also the wife of Jeffrey Sprecher, the CEO of Intercontinental Exchange and co-chair of Trump's inaugural committee.
🔹 On November 18, 2024, Trump Media and Technology Group submitted a trademark application for "TruthFi" to the U.S. Patent and Trademark Office. According to the content of the trademark application document cited in media reports, the trademark's usage scope covers digital wallets and payment services. Many industry insiders speculate that this may signal Trump's business group is preparing to officially enter the digital asset trading services field.
Questioning and challenging
On November 28, 2024, the market value of BTC reached a peak price of $99,660 that day, approaching the $100,000 mark and setting a recent historical high. Since Trump won the general election on November 5, 2024, the market value of BTC has increased by over 40%.
Despite the high market sentiment, most industry insiders are betting that the Trump administration will be more crypto-friendly than the Biden administration, not only implementing regulatory measures more favorable to the development of the crypto industry but also further enhancing the value position of digital assets. However, some cautious financial scholars and industry insiders have raised criticisms and doubts. They generally believe that the concept of establishing a BTC National Reserve Plan is groundbreaking, but it is currently impossible to become a reality quickly. These equally thought-provoking doubts focus on several aspects:
The asset stability of BTC is limited, and it has yet to demonstrate the stability required to be considered a reserve asset. If the government participates in large-scale acquisitions of digital assets in its own name, it would indeed push up the market price of digital assets in the short term, but it could easily lead to market distortions.
It does not align with the cautious stance the U.S. government has held toward the crypto industry so far. If the BTC reserve plan is initiated, it means there is a possibility that the U.S. government will invest public funds into acquiring BTC. However, such actions do not align with the U.S. government's current cautious stance on the crypto industry, and the planning of these government funds would shift from relatively stable investments to the digital asset field, which would increase unnecessary risks to government finances.
There must be a significant policy shift in regulation. Supporting the BTC reserve plan for long-term operation would not only mean a significant policy shift in regulation but also require industry participants to change their attitudes toward holding decentralized assets—from aggressive to conservative, from pursuing high volatility to long-term stable holding— and all of this is not something that can be achieved easily or quickly.
In a situation of high government fiscal deficit, it is generally not advisable to adopt financial strategies that invest in unstable assets. According to data released by the U.S. Treasury, in the fiscal year 2024 (i.e., from October 1, 2023, to September 30, 2024), U.S. government expenditures reached $6.75 trillion, with revenues only at $4.92 trillion, resulting in a fiscal deficit of $1.83 trillion, and total government debt reaching $36.035 trillion, all setting new historical records.
Trump's idea expressed during a media interview during the presidential election that "perhaps we could use crypto checks or BTC to repay U.S. government foreign debt" is not something that can easily gain support from all creditors, unless the market value of BTC tends toward extreme stability or is exchanged for a substantial value. Imagine, what kind of creditor would be willing to accept an asset whose value can easily fluctuate wildly in a short time and is clearly not very secure as a debt repayment? Moreover, the issuance of sovereign debt is based on national credit backing; for the decentralized philosophy upheld by the crypto industry, if there are indeed creditors willing to accept BTC for repaying national debts, BTC will be endowed with national credit. At the same time, BTC itself is a limited asset, and as more creditors accept BTC for national debt repayment, the centralization trend of the value endowed to BTC will become more evident— and the ultimate result of all this is that a centralized government will be able to manipulate the actual value of BTC, which is different from the nature of a country recognizing BTC as a general equivalent.
Institution-level storage solutions may have significant vulnerabilities, making it difficult to completely avoid the risk of cyber attacks. In addition, the environmental issues caused by BTC mining in terms of energy consumption have become a controversial challenge, and vigorously promoting BTC reserves may further exacerbate these controversies.