Original Mumu Vernacular Blockchain December 27, 2024 12:02 Anhui
This is the 2112th original issue of Vernacular Blockchain
Author | Mu Mu
Produced by｜Baihua Blockchain (ID: hellobtc)
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 issue of 'Bitcoin strategic reserves' was actually proposed and discussed before the U.S. presidential election. Senator Cynthia Lummis proposed the (Bitcoin Strategic Reserve Act of 2024) on July 31, 2024, suggesting the purchase of 200,000 Bitcoins annually, reaching 1 million within five years.
Subsequently, during the campaign, Trump promised at a Bitcoin conference in the crypto industry to become the 'crypto president.' The industry hopes he will fulfill this promise by creating a Bitcoin inventory via executive order, ensuring that the industry can obtain banking services and establishing a cryptocurrency committee.
On December 17, 2024, the Bitcoin Policy Institute (BPI), a non-profit organization focused on Bitcoin policy research (note that it is an unofficial organization, yet it remains one of the important think tanks for decision-makers on Bitcoin-related issues), recently released a draft of an executive order aimed at providing reference recommendations for Trump's 'Bitcoin strategic reserve' executive order framework. The draft explicitly suggests allocating 1%-5% of treasury assets for purchasing Bitcoin to form a long-term reserve, led by the Treasury with cooperation from the Federal Reserve to gradually establish reserves.
On December 19, 2024, Federal Reserve Chairman Jerome Powell (expected to continue serving his term after Trump takes office) expressed cautious views at a press conference, stating that the Federal Reserve has no intention to participate in any government accumulation of Bitcoin; such matters fall within Congress's responsibilities, and the Federal Reserve is not seeking to change existing laws to allow holding Bitcoin.
From the latest situation, although the Federal Reserve Chairman holds conservative views, under the favorable conditions of a crypto-friendly U.S. Treasury Secretary nominated by Trump and the rapid introduction of a 'presidential executive order' after taking office, these factors will not affect Trump's team's continued push to incorporate Bitcoin into the U.S. strategic reserve plans.
02
Earliest Implementation Time
Given that the 'Bitcoin strategic reserve' is not a trivial issue that can be executed immediately on a whim by the President of the United States, we will not see its implementation immediately. According to the current executive orders or legislative processes in the country, if Trump wants to implement the Bitcoin strategic reserve, he will need to let the cryptocurrency committee conduct policy research and feasibility assessments immediately after taking office, formally proposing a plan upon completion, which can then proceed through two pathways:
Path One: Presidential Executive Order (earliest in the second half of 2025)
Issuing an executive order directly after Trump takes office is the quickest path, as it can bypass the conservative and opposing resistance from the Federal Reserve and Congress, and is also based on the draft provided by the 'Bitcoin Policy Institute,' directing the U.S. Treasury to utilize the Exchange Stabilization Fund (ESF) to directly allocate Bitcoin.
However, while this method is quick and convenient, it also has side effects. Although the Treasury's Exchange Stabilization Fund does not require congressional approval, it can be investigated and legislated against by Congress. An executive order can also be overturned and modified by the next president, so its 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 pursued, it will require a longer process. The bill, after going through policy research and feasibility assessments by the cryptocurrency committee, needs to be submitted to Congress and reviewed by the Senate Banking Committee, then go through the Senate, House of Representatives, and finally be signed by the President to complete the legislation.
This process may experience various back-and-forth negotiations and is relatively complex since many conservative members of Congress are likely to raise objections and obstruct. Therefore, while this path can lead to a lasting and stable bill, it will take a long time, possibly not until the second half of 2026 or 2027.
Recently, news has emerged that the crypto industry is pushing Trump's team to issue an executive order on the first day of his presidency next month, initiating his promised cryptocurrency policy reforms to help mainstream crypto. If this occurs via executive order, we may see the implementation of the Bitcoin strategic reserve as early as mid-2025.
03
Several Important Time Points
During the process of relevant executive orders or bills regarding Bitcoin strategic reserves, 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 can officially start issuing orders. This time point will mark the beginning of the new president's administration, and relevant 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 this inauguration, making it quite lively, and the financial market will also pay close attention.
2) Mid-2025, completion of policy research phase
Based on the timeline, the crypto committee's policy research is expected to be completed at the earliest by mid-2025, proposing a feasibility report and draft regarding Bitcoin reserves. Subsequently, Trump can sign an executive order, marking the formal introduction of the 'Bitcoin strategic reserve.'
3) Second half of 2025 to early 2026, implementation details and potential congressional tug-of-war
After signing the relevant executive orders and confirming the relevant framework, the U.S. Treasury, the Federal Reserve, and other related departments will begin to formulate specific implementation details, including Bitcoin procurement methods, reserve ratios, asset management rules, etc., and then officially implement them.
During this period, it is expected not to be too smooth, as opposing members of Congress will join in obstructing and repeatedly pulling back.
Finally, if all goes well and the Bitcoin reserve strategy yields objective 'benefits,' it may further promote legislation in the future, which will have a profound impact on the crypto market landscape.
04
Summary
The path to 'Bitcoin strategic reserves' seems filled with twists and turns, not something that can be realized in a day or two; it will take at least half a year. Nevertheless, Trump's 'U.S. Bitcoin strategic reserve' has created positive expectations and has also set a 'template' driving central banks, financial institutions, and listed companies around the world to research and explore the feasibility of Bitcoin reserves. Although there may still be many uncertainties regarding policy details and final implementation times, we still need to monitor and pay attention to key time points, ready to make adjustments as needed.
