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Trump transition live updates: President-elect raises prospect of pardons for Jan. 6 crimes

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Top cryptocurrency executives and investors are pushing President-elect <a href="https://www.washingtonpost.com/donald-trump/" target="_blank" class="contextual_link">Donald Trump</a> to create a national stockpile of bitcoin, a move that could more closely tie the little-regulated, volatile industry to the future of the country’s finances.

Trump has publicly expressed broad interest in the idea, though some crypto advocates have urged him to take an even more aggressive step: They want him to acquire tokens worth billions of dollars, then hold them for decades in the hopes they will skyrocket in value and help pay down the national debt.

Economists and fiscal experts say the proposal carries significant risks: Crypto prices can fluctuate wildly, potentially putting taxpayer dollars at risk if the government acquires bitcoin at its current level — near record highs — and its value ultimately falls. They also say a strategic reserve would primarily benefit existing bitcoin owners, who could profit immensely if Trump’s actions send prices soaring and they opt to sell.

“There’s just no discernible logic to do it,” said Mark Zandi, the chief economist at Moody’s Analytics. “I get why the crypto investor would love it. Other than the crypto investor, I don’t see the value, particularly if taxpayers have to ante up.”

But crypto magnates have dismissed those concerns as they rally behind Trump, who aggressively courted their support throughout the <a href="https://www.washingtonpost.com/elections/election-2024/" target="_blank" class="contextual_link">2024 election</a> by promising to introduce industry-friendly policies. Many crypto leaders offer a series of rosy predictions about the fiscal benefits of a new federal crypto cache — claiming, for example, that the projected rise in bitcoin prices could help the government pay down its debt, now around $36 trillion.

“If you’re not going to be storing this asset, [which] is essentially digital gold, then your adversaries are going to find opportunities to monetize it,” said Cody Carbone, the president of the Digital Chamber, a lobbying group for the industry. He said a strategic reserve “sets us up for massive financial success.”

The U.S. government currently holds foreign currencies and gold in reserve, while managing emergency stockpiles of medical equipment and critical resources, such as oil, which it periodically releases to try to lower the price of gasoline.

Crypto advocates say the government should similarly retain bitcoin, capitalizing on an industry-held assumption that the currency will continue to rise in value as its supply dwindles. The protocol that generates individual coins — through a process known as mining — caps the total number of bitcoins in circulation at 21 million.

Johnnie Izquierdo

“The case for it is, if it behaves as proponents say it will, and the purchasing power of the fiat U.S. dollar continues to decline relative to bitcoin over time, ... [you can use it] to pay off a significant chunk of national debt,” said Andrew O’Neill, a managing director focused on digital assets at S&amp;P Global. “You break that spiral of ever-increasing indebtedness.”

The U.S. government already possesses some bitcoin, part of a trove of cryptocurrencies largely acquired by federal law enforcement from past criminal probes and asset seizures. In total, these holdings are valued around $20 billion, <a href="https://intel.arkm.com/explorer/entity/usg">according to Arkham Intelligence</a>, a crypto tracking firm.

The tokens in federal possession include Tether, a cryptocurrency whose underlying financial assets are managed in part by Howard Lutnick, a top Trump adviser and chief executive of the investment firm Cantor Fitzgerald. A spokeswoman for Lutnick, who has been tapped as Trump’s secretary of commerce, did not respond to a request for comment.

Under current policy, federal officials periodically sell the digital currencies in their custody. But Trump has signaled he plans to <a href="https://www.washingtonpost.com/business/2024/07/27/trump-bitcoin-support-2024-cryptocurrency/" target=_blank>halt those sales</a>: Speaking at an industry conference in Nashville in the summer, he pledged if he were president that the administration would “keep 100 percent of all the bitcoin” obtained by the U.S. government — and turn those tokens into the “core” of a new strategic reserve.

“For too long, the government has violated the cardinal rule that every bitcoin owner knows by heart: Never sell your bitcoin,” Trump said, promising to “transform that vast wealth into a permanent national asset to benefit all Americans.”

Many crypto executives oppose the federal sale of assets because it can drive down prices: In one example, bitcoin dipped earlier this year when <a href="https://www.cnbc.com/2024/07/08/germany-owns-2-billion-in-bitcoin-btc-its-freaking-out-investors.html" target="_blank">Germany began to liquidate tokens</a> it seized from a crackdown on online piracy. The prospect that Trump might reverse that policy — on top of other pro-crypto policy concessions — has helped to send the price of bitcoin soaring since the election, reaching $92,000 by Tuesday.

“There has been an effort in the Washington bureaucratic swamp to stifle innovation with more regulation and higher taxes, but President Trump will deliver on his promise to encourage American leadership in crypto and other emerging technologies,” Brian Hughes, a spokesman for the president’s transition team, said in a statement.

Since his election victory, Trump has offered scant details about his prior promise to halt federal sales of bitcoin, though his top aides are considering a number of pro-crypto policies — and industry-friendly officials who <a href="https://www.washingtonpost.com/business/2024/11/11/trump-crypto-regulation-bitcoin/" target=_blank>could lead key agencies</a> that oversee financial regulation. That has touched off a fierce lobbying campaign by crypto executives, who feel they have a rare opportunity to achieve a lucrative political victory.

“This was unclear 10 days ago, but today, you have a pro-bitcoin White House, a pro-bitcoin House of Representatives and a pro-bitcoin Senate,” said Michael Saylor, the executive chairman of MicroStrategy, a major bitcoin investor, at a conference hosted by Cantor Fitzgerald earlier this month.

Saylor likened the establishment of a new crypto reserve to the Louisiana Purchase, when the U.S. government acquired a swath of western land from France in the early 1800s: “Bitcoin is manifest destiny for the United States. I think the Trump administration understands it.”

But it is unclear how much, if at all, the incoming administration can actually adopt on its own, or if Trump must rely on Congress, where Sen. Cynthia Lummis (R-Wyoming) — a crypto supporter with major industry backing — has already introduced a bill for a bitcoin reserve.

“We’ve talked about the benefits of a reserve,” Lummis said in an interview, referring to her conversations with Trump’s team. “I’m sure that, within the weeks to come, that there will be an opportunity to sit down with someone in the Trump orbit who can help us do that deeper dive.”

Lummis has proposed a more ambitious effort: Her measure would commission a new process that would see the United States buy up to <a href="https://www.lummis.senate.gov/press-releases/lummis-introduces-strategic-bitcoin-reserve-legislation/" target=_blank>1 million coins</a> and hold them for the next two decades. To finance those purchases, federal officials would engage in a complicated set of accounting maneuvers, such as revaluing the gold the government already possesses — and, essentially, writing a check from the Federal Reserve to the Treasury for the difference.

Lummis said the effort would “cut the national debt in half,” adding: “Not a single U.S. taxpayer dollar would go into the bill I filed.”

Policy experts across the political spectrum have questioned the merits of such a plan, arguing that revaluing the country’s gold is highly inflationary — and diverting money into crypto still creates risk for taxpayers because the value of bitcoin is not guaranteed to continue rising. The currency has seen major slumps in recent years: In one five-day period in May 2022, for example, the price of bitcoin dropped by more than 20 percent.

“Because we cannot determine what the price of bitcoin is going to be 20 years from now, it’s hard to sort of make the argument for bitcoin over gold or another asset that is more stable,” said Ananya Kumar, the deputy director for future of money at the GeoEconomics Center at the Atlantic Council.

Any plan that seeks to use taxpayer dollars to finance cryptocurrency purchases could also add to the country’s mounting debt, because the United States may need to borrow some of that money — and subsequently would owe interest on it. That could exacerbate the very problem that some policymakers say they are trying to solve.

But advocates insist the greatest benefit of a strategic reserve is not measured in dollars: It’s the credibility they would gain as the U.S. government opts to incorporate digital assets more fully into the financial system.

“It’s a positive catalyst for crypto,” said Marshall Beard, the chief operating officer at Gemini, the crypto trading platform founded by Tyler and Cameron Winklevoss, two Trump donors. “The U.S. government is going to take it seriously as a piece of a portfolio and leverage that,” he said, adding that it would illustrate the “legitimacy of the asset class and bitcoin itself.”

American University, BA in Journalism

Tony Romm is the economic policy and accountability reporter at The Washington Post. 


Tony Romm

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Crypto leaders push Trump for federal bitcoin reserve

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