Why Trump’s bitcoin reserve is letting down his big crypto backers
The action came the night before hosting the first Crypto Summit in DC.
Late last evening and on the eve of the inaugural White House Crypto Summit, President Donald Trump signed an executive order to establish the much-awaited bitcoin reserve, clarifying some questions after his Sunday announcement, in which he said the reserve would include altcoins such as XRP, solana, and cardano. The executive order clearly prioritizes bitcoin but does allow for “digital assets other than bitcoin.”
Another promise made, another promise kept.
— Senator Cynthia Lummis (@SenLummis) March 7, 2025
We are becoming the bitcoin and digital asset capital of the world. America is so ₿ack. pic.twitter.com/bbuGR0sKBE
Bitcoin dropped sharply from $91,000 to $85,000 following the announcement. This morning, most cryptos were trending down, while bitcoin has somewhat stabilized around $89,000 as of 10 a.m. ET.
“Many investors anticipated a more aggressive commitment to outright purchases for the reserve, so this pullback reflects a recalibration of expectations,” said Alan Orwick, cofounder of Quai Network. “The EO’s language — focusing on ‘budget neutral’ stockpile rather than mandating immediate buys — likely tempered the initial hype.”
Trump’s AI and Crypto Czar David Sacks posted on X that the reserve will be “capitalized with bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings. This means it will not cost taxpayers a dime.”
While this seems nice for taxpayers, it’s unclear if it’s legally feasible. Using confiscated crypto assets to partly fund the reserve instead of liquidating the coins at auction — as the government has done before — would require new legislation, experts told Sherwood News in December.
Ari Redbord, VP and global head of policy and government affairs at TRM Labs, told Sherwood that this strategy seems very prudent.
“US law enforcement agencies, from the FBI to IRS-CI, have seized billions of dollars in illicit bitcoin — $3.6 billion in the Bitfinex case alone,” Redbord said. “Ensuring an accurate accounting of those assets and putting them to use for the benefit of the US Treasury is critical.”
Redbord said this approach strikes the right balance: prioritizing the seizure of funds tied to hacks, ransomware attacks, scams, and fraud while ensuring they are used effectively for the American people.
“Utilizing trained federal agents with access to blockchain intelligence tools is the ultimate argument for government efficiency,” he said.
The order also clarifies who will custody the assets, noting “responsible stewardship of the government’s digital assets under the Treasury Department.”
André Dragosch, director and head of research for Bitwise, told Sherwood that the devil is in the details, saying that Sacks stated in his tweet that purchases of additional bitcoins would need to adhere to “budget neutrality.”
“Meaning the US government probably can’t increase the deficit to buy bitcoin, but that will ultimately depend on their interpretation of budget-neutrality (short- vs. long-term),” Dragosch said.
The fact sheet says the non-bitcoin digital assets will not be purchased and will be only “those obtained through forfeiture proceedings.”
Michael Bucella, cofounder of Neoclassic Capital and member of the board of directors of TeraWulf, said he’s glad the reserve was simplified “from a seemingly arbitrary basket to one of just bitcoin.”
“It is the cleanest path forward from a crypto perspective, as I have no doubt the discourse over the announcement generally will be tremendous,” Bucella said, adding that the idea of a bitcoin national reserve was almost unthinkable when he entered the industry in 2017. “But here we are.”
“President Trump is leading on this issue because he listened to the millions of Americans looking for the inclusivity, transparency, and accountability that bitcoin provides,” Brian Morgenstern, head of public policy at Riot Platforms, told Sherwood. “His campaign promise to do this helped him get elected, and following through on it is a victory for the nation.”
