Dennis Porter, founder of the Satoshi Action Fund, has released a draft executive order prepared for President-elect Donald Trump to establish a Strategic Bitcoin Reserve through the Exchange Stabilization Fund (ESF).

The order allows for an initial allocation of up to 2% of the ESF’s total portfolio value during an 18-month trial period. Furthermore, BTC in U.S. government custody will be used as the foundation for the Reserve.

The draft order outlines a roadmap for integrating Bitcoin into the ESF, a traditional fund used to stabilize the US dollar and respond to macroeconomic shocks. At the same time, the draft provides a legal framework to treat Bitcoin as a reserve asset similar to foreign currency, while ending the auction of Bitcoin seized by US agencies.

Key Proposals

One of the key terms is that the US Treasury will be allowed to purchase, hold, and manage Bitcoin as part of the ESF's portfolio.

Furthermore, the draft proposes that the Treasury establish a working group to develop a custody system to ensure the safe management of Bitcoin holdings. This includes evaluating solutions that provide direct access to the Treasury’s reserves, while also leveraging existing custody infrastructure, such as the one currently used by the United States Marshals Service (USMS).

The proposal also ends the auctioning of seized Bitcoin by the USMS. Instead, the roughly 200,000 BTC currently under US custody — worth $20.6 billion at press time — would be used as the initial foundation for the Strategic Bitcoin Reserve.

Strict Monitoring Mechanism

The draft includes robust oversight mechanisms to balance innovation and accountability. The Treasury would be required to publish semiannual reports (a document summarizing financial and operational performance) detailing transactions, Bitcoin holdings, and risk management strategies to Congress and the President.

Additionally, the Treasury Inspector General and the Government Accountability Office (GAO) will conduct periodic audits, with annual public summaries to ensure transparency.

While the ESF provides an initial means to store Bitcoin, the draft notes that this may not be a long-term solution.

Within 24 months, the Treasury Department will submit a comprehensive report to Congress outlining the limitations and benefits of using the ESF as a Bitcoin custody facility, alternative legal frameworks for managing the reserve, and legislative proposals to formalize the Strategic Bitcoin Reserve in U.S. federal law.

No Impact on Monetary Policy

The proposal emphasizes that the creation of a Bitcoin reserve would not interfere with the Federal Reserve’s independence in setting monetary policy. The provision is intended to address concerns that integrating Bitcoin could complicate traditional monetary policy frameworks or undermine confidence in the US dollar.

Conversely, by leveraging Bitcoin’s status as a non-sovereign global asset, the proposal aims to mitigate macroeconomic risks, stabilize the US dollar, and position the US at the forefront of financial innovation.

If the bill passes, it would be the government’s biggest step yet in accepting Bitcoin, with far-reaching implications for the crypto industry, US economic policy, and global reserve practices.

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