Expectations for Bitcoin reserves to be approved by 2025 remain challenging as the FED refuses to support the U.S. government. What are the alternative solutions for establishing a Bitcoin reserve fund ?

FED Will Not Participate in Bitcoin Reserve Creation
On December 19, Federal Reserve Chairman Jerome Powell made it clear during a press conference following the monetary policy meeting that the FED has no intention of participating in any government plans to accumulate Bitcoin.

Bitcoin Reserve Probability Drops
According to the Polymarket prediction platform, the probability of forming a "Bitcoin Strategic Reserve" (BSR) dropped from a peak of 40% on December 18 to 34% after Powell's speech. The total market capitalization of cryptocurrencies also fell sharply by about 7.5% on December 19.

Can the FED Block Trump’s Bitcoin Reserve Fund?
First, it is important to clarify the role of the FED in the U.S. financial system. The FED operates under Congress, which has the highest authority over financial regulatory bodies. It is responsible for issuing regulations and financial policies through laws and authorizing other financial institutions, such as the SEC and FED, to carry out their functions.
In the U.S. economy, monetary policy and fiscal policy are the two main tools for economic management, with the FED and the Treasury Department respectively responsible for them. These two agencies maintain a system of checks and balances while operating independently to ensure the smooth functioning of the economy and the U.S. financial system.
While the FED has a high degree of independence in monetary policy and stabilizing the national economy, it does not have the authority to "veto" the creation of a Bitcoin Strategic Reserve (BSR).

Trump’s Bitcoin Reserve Proposal
If the Trump administration wanted to quickly implement a Bitcoin reserve, the most direct approach would be to sign an executive order upon taking office, instructing the Treasury Department to use the Exchange Stabilization Fund (ESF) to purchase Bitcoin directly.
The ESF is a special fund managed by the Treasury, primarily used to intervene in the foreign exchange market, support the stability of the U.S. dollar, and deal with international financial crises. This fund includes assets such as USD, Special Drawing Rights (SDRs), and gold.
In theory, the President could issue an executive order directing the Treasury to adjust the ESF's allocation to purchase or hold specific assets, thus avoiding the direct approval process by Congress and minimizing political opposition. A recent executive order drafted by the Bitcoin Policy Institute aimed to implement a Bitcoin reserve in this way.
To establish and maintain a stable long-term Bitcoin reserve, however, legislation through Congress would be necessary, incorporating Bitcoin into the "Strategic Reserve Act" or similar laws to recognize Bitcoin as a national strategic reserve asset. This approach would have higher legal legitimacy and create a long-term framework for holding Bitcoin.
The "U.S. Bitcoin Strategic Reserve Act," proposed by Senator Cynthia Lummis, follows this path. It has been formally introduced in Congress and is currently under review by the Senate Banking Committee.

The Way Forward
Regardless of whether through executive orders or legislation, current proposals suggest that establishing a Bitcoin reserve will ultimately require the Treasury Department to take the lead, rather than the FED.
In addition to the options mentioned, theoretically, the FED and the Treasury could choose a middle path to allocate Bitcoin. The FED could purchase Bitcoin through open market operations and add it to its balance sheet. With its relative independence, the FED would not need Congressional approval, but it would require a clear policy framework to support Bitcoin purchases.
However, given the recent statements from the FED, the likelihood of this method being implemented in the short term is very low. Meanwhile, the Treasury could set up a special fund to invest in Bitcoin as part of its fiscal investment plan, though this would still require Congressional approval.

If the reserve is approved, BTC would need to appreciate hundreds of times to cover federal debt.
No matter which path is chosen, the FED’s "no" answer does not entirely dismiss the Bitcoin reserve proposal. The pragmatism of the Trump administration signals support through action.
The answer regarding the Bitcoin reserve fund will likely be clarified when Trump officially takes office in early January 2025.
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