The President Trump keeps his electoral promise to preserve 100% of confiscated bitcoins but disappoints more ambitious expectations.
On March 6, United States President Donald Trump signed an executive order establishing the creation of a Strategic Bitcoin Reserve, formalizing the United States’ commitment to retain all confiscated bitcoins rather than selling them. This move marks a paradigm shift in U.S. government policy toward Bitcoin, but also raises a critical point that could evoke historical events such as executive order 6102.
Promise kept
During the 2024 Bitcoin Conference in Nashville, Donald Trump had announced that, if elected, his government would keep 100% of all confiscated bitcoins, including them in the national reserve strategy. The promise was formally kept with the executive order establishing two distinct entities:
- Strategic Bitcoin Reserve – dedicated exclusively to Bitcoin;
- United States Digital Asset Stockpile – for all other confiscated digital assets.
As anticipated by Commerce Secretary Howard Lutnick, Bitcoin has received different treatment compared to all other digital assets. This separation could represent a first, albeit minimal, recognition of the fundamental distinction between Bitcoin and other cryptocurrencies.
The executive order also establishes that the Treasury Department will oversee both reserves, but with a different approach: while confiscated bitcoins will be preserved as a long-term store of value, other digital assets can only be sold at the government’s discretion.
The current reserve and the Bitfinex case
According to Arkham Intelligence estimates, the U.S. government currently owns approximately 198,000 BTC. However, as highlighted by some users, about 95,000 BTC should be returned to Bitfinex as “restitution” for funds stolen in the 2016 hack.
The current U.S. government reserve should come from the following seizures:
- 94,643 BTC from the Bitfinex hack;
- 69,370 BTC from the seizure of dark net market Silk Road;
- 12,267 BTC from additional seizures related to Bitfinex;
- 9,800 BTC seized from James Zhong for activities related to Silk Road;
- 2,818 BTC from other Bitfinex-related seizures.
Net of the restitution to Bitfinex, the government’s effective reserves would be around 103,000 BTC.
Possible “zero-cost” strategies for Bitcoin acquisition
The executive order authorizes the Treasury and Commerce Departments to develop budget-neutral strategies to increase bitcoin reserves without burdening taxpayers. Various proposals have been advanced by the community:
- Mining partnership program: incentivize American mining companies to deposit a percentage of mined bitcoins in the strategic reserve in exchange for tax or energy benefits;
- Conversion of confiscated assets: use proceeds from the sale of other confiscated digital assets (contained in the Digital Asset Stockpile) to purchase bitcoins;
- Issuance of zero-rate bonds to finance the purchase of new bitcoins;
- Optimization of expenses for bitcoin accumulation: reducing unnecessary expenses and allocating savings to bitcoin purchases, it’s possible to increase reserves without compromising the overall budget;
- Conversion of sanctions: accepting bitcoin payments for administrative sanctions and federal fines, with incentives for those who choose such payment methods;
- Conversion of a portion of the $760 billion in gold reserves into bitcoin, as suggested by Standard Chartered.
Following the signing of the executive order, in an interview with CNBC, Treasury Secretary Bessent commented:
“The first thing to do is to stop selling government bitcoins. We will see what the acquisition strategy will be.”
The community’s reactions
Part of the Bitcoin community, especially in the United States, welcomed the executive order with enthusiasm. Although the measure does not include the immediate purchase of new bitcoins as some had hoped, it still represents a step forward in the institutional legitimization of Bitcoin according to some users.
Analyst Lyn Alden stated she favors the chosen mode for the strategic reserve, agreeing with Nic Carter‘s analysis. The key points that Alden shares with Carter are:
Samson Mow, CEO of Jan3, highlighted the clear separation between Bitcoin and other cryptocurrencies, commenting:
“As I suspected, Sunday’s Truth Social post stating that those altcoins would be added to a reserve was actually just a way to appease lobbyists before decisions were finalized and their fate was sealed.”
In a subsequent tweet, Mow highlighted the potential domino effect that could arise from the announcement, stating:
“Now it really seems that everything is coming to a head. Once the news of the U.S. SBR is fully understood and everyone starts implementing strategies on Bitcoin, everything could accelerate very, very quickly.”
Bitwise CIO Matt Hougan stated that Trump’s establishment of a bitcoin reserve “drastically reduces the likelihood that the U.S. government will one day ‘ban’ Bitcoin and greatly increases the likelihood that other countries will establish strategic bitcoin reserves.”
On the other hand, another part of the Bitcoin community has lined up against the chosen mode for the strategic reserve, defining it as “a rebranding of bitcoins confiscated by the government.”
Charles Edwards, founder of Capriole Investments, stated:
Seth For Privacy, vice president of Cake Wallet, commented:
Additionally, a controversial aspect of the executive order concerns the distorted incentives that could derive from civil forfeiture. As highlighted by journalist L0la L33Tz on Bitcoin Magazine, with the executive order establishing that confiscated bitcoins will feed the strategic reserve, cases of civil forfeiture could increase, a procedure that allows authorities to seize assets even in the absence of criminal convictions.
