Written by: imToken
Starting in 2024, digital assets such as BTC gradually enter the mainstream spotlight, becoming important topics for institutional investment and cultural discussions. Additionally, with the listing of Bitcoin spot ETFs in the U.S. securities market, the holdings of institutions and enterprises have also rapidly increased, further reinforcing BTC's role as 'digital gold.'
Supporters generally believe that BTC can become a powerful inflation hedge, with its hedging capability comparable to that of 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 his 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 in the crypto market for the future.
Now, the U.S. presidential election's popular vote campaign has come to a phase conclusion. Can Trump's compelling plan to 'establish a BTC national reserve' turn 'ideal into reality'?
Review of Concepts
Republican Senator Cynthia Lummis from Wyoming is an advocate for advancing digital asset development and criticizes the U.S. Securities and Exchange Commission's stringent enforcement strategy against the crypto industry. In July 2024, Cynthia Lummis also proposed a bill related to BTC assets, with core content including:
The proposal establishes a decentralized BTC storage facility network managed by the U.S. Department of the Treasury (commonly referred to as BTC vault).
The proposal suggests that the U.S. government acquire up to 200,000 BTC each year over the next five years, which would bring the U.S. government's BTC reserves to 1 million BTC, accounting for about 5% of the total BTC supply.
The proposal states that the U.S. government must hold the aforementioned BTC for at least 20 years, and these BTC can only be specifically used to repay U.S. debt. Within two years after the implementation of the bill, the proportion of the BTC sold by the U.S. government cannot exceed 10%.
The proposal suggests reassessing the value of Gold Certificates held by the U.S. Federal Reserve System, adjusting their value to the actual market value to enhance asset value, thereby providing financial 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 advocated 'establishing a BTC national reserve' plan. After Trump won the presidential 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 voting result of 176 in favor and 26 against, creating a new milestone in digital asset regulation.
(Bitcoin Rights Bill) core provisions include: individuals and businesses have the right to self-custody of digital assets, operate blockchain nodes, and trade without interference from restrictive municipal regulations.
This bill was initiated by Republican Congressman Mike Cabell and received bipartisan voting support, reflecting the growing recognition of the potential for blockchain technology transformation across political parties. However, all 26 opposing votes for the (Bitcoin Rights Bill) came from Democratic representatives. Nonetheless, prominent 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 inclusion.
Following the passage of the (Bitcoin Rights Bill), Republican Congressman Mike Cabell teamed up with another Republican Congressman Aaron Kaufer to file a legislative application for 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.
If the aforementioned bill passes, the acquisition scale of BTC in Pennsylvania alone could reach as high as $970 million.
△ Source: Trump Digital Trading Card #10004
Possible Future
In addition to the proposed BTC national reserve plan during the election phase, after winning the presidential election, the Trump team has also publicly disclosed support policies related to the crypto industry, including:
🔹 A dedicated official position responsible for digital asset policy will be established in the White House. Bloomberg reported that Trump intends to appoint a 'crypto asset tsar.' Currently, it is unclear what budget, team, and regulatory powers this government position will have, but as an internal position within the U.S. government, it is speculated that the primary function of this position will focus more on political affairs rather than directly participating in policy formulation, making it more likely for the officials in this position to serve as liaisons between federal regulatory agencies and the outside world.
🔹 Entrepreneur Elon Musk, a supporter of Trump, and Vivek Ramaswamy will jointly lead the proposed 'Department of Government Efficiency' (abbreviated as DOGE, sharing the same name as the digital asset supported by Elon Musk, but this is not an official federal government department), aiming to provide advice and guidance from outside the government to promote large-scale structural reform and create an unprecedented entrepreneurial approach within the government.
Although the 'Department of Government Efficiency' does not involve reforming the crypto industry, the news of its establishment announced on November 12, 2024, led to a sudden surge in the market value of the digital asset DOGE, which reached a recent peak of market value on November 23, 2024, with an increase of about 56% compared to the market value on the day before the announcement.
Beyond political activities, after winning the presidential election, Trump's corporate group has also been frequently active in the crypto market:
🔹 Trump's company, Trump Media & 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 associated with Trump's electoral 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 the Intercontinental Exchange, who is a co-chair of Trump's inauguration committee.
🔹 On November 18, 2024, Trump Media & Technology Group submitted a trademark application for 'TruthFi' to the U.S. Patent and Trademark Office. According to the trademark application documents cited, the trademark's usage scope covers digital wallets and payment services. Many industry insiders speculate that this may signal Trump's business group preparing to officially enter the digital asset trading service field.
Questions and Challenges
On November 28, 2024, the market value of BTC reached a daily high of $99,660, approaching the $100,000 mark, setting a new recent historical high. Since Trump won the presidential election popular vote on November 5, 2024, BTC's market value has risen by over 40%.
Despite the high market sentiment, most industry insiders are betting that the Trump administration will be more friendly to the crypto industry than the Biden administration, not only implementing more favorable regulatory measures for the development of the crypto industry but also further enhancing the value status of digital assets. However, there are also cautious financial scholars and industry insiders who have raised criticisms and doubts. They generally believe that while the concept of establishing a BTC national reserve plan is pioneering, it is currently unlikely to become a reality quickly. These thought-provoking doubts focus on several aspects:
The asset stability of BTC is limited, and so far it has not demonstrated the stability required to serve as a reserve asset. If the government participates in large-scale acquisitions of digital assets in its own name, it would indeed drive up the market price of digital assets in the short term, but it could easily distort the market.
This does not align with the cautious stance the U.S. government has maintained toward the crypto industry thus far. If the BTC reserve plan is initiated, it implies the possibility that the U.S. government would invest fiscal funds into acquiring BTC. However, such operations do not conform to the U.S. government's current cautious stance toward the crypto industry, and the planning of these government funds will shift from relatively stable investments to the digital asset field, which would add unnecessary risk to government finances.
A significant policy shift at the regulatory level is required. Supporting the BTC reserve plan for relatively long-term operation not only means that significant policy shifts are needed at the regulatory level, but also that industry participants must change their attitudes toward holding decentralized assets—from radical to conservative, from pursuing high volatility to long-term stable holding—and all of this is not something that can be easily achieved in a short time.
In the context of high government fiscal deficits, financial strategies involving investments in unstable assets are generally avoided. According to data released by the U.S. Treasury, in fiscal year 2024 (from October 1, 2023, to September 30, 2024), U.S. government expenditures reached $6.75 trillion, while revenues amounted to only $4.92 trillion, resulting in a fiscal deficit of $1.83 trillion and a total government debt of $36.035 trillion, both setting new historical records.
Trump's idea expressed during a media interview during the presidential election, suggesting that 'perhaps we can use crypto checks or BTC to repay the U.S. government's foreign debt,' is not something that can easily gain the support of all creditors. Unless BTC's market value becomes extremely stable or is exchanged for assets of considerable value, one might wonder which type of creditor would be willing to accept an asset that can show significant fluctuations in value and has clear security concerns as repayment for debts? Furthermore, the issuance of sovereign debt is based on national credit endorsement; regarding the decentralized concept upheld by the crypto industry, if a creditor truly accepted the use of BTC to repay national debt, BTC would then be endowed with national credit. At the same time, BTC itself is a limited-quantity asset. The more creditors accept BTC for debt repayment, the more pronounced the trend of centralization of BTC's value will be—ultimately resulting in a centralized government being able to manipulate the actual value of BTC, which is different from the nature of a country recognizing the use of BTC as a general equivalent.
Institutional-level storage solutions may have significant vulnerabilities, making it difficult to fully avoid the risk of cyberattacks. Additionally, the environmental issues raised by BTC mining in terms of energy consumption have already become a highly controversial challenge, and vigorously promoting BTC reserves may further exacerbate these controversies.
