The Strategic Bitcoin Reserve will primarily hold Bitcoin while the Digital Asset Stockpile is intended to manage all other digital assets owned by the U.S. government, including those obtained through the same forfeiture processes.
How does a Strategic Bitcoin Reserve work?
A Strategic Bitcoin Reserve is expected to function similarly to other reserves like gold or foreign currencies, serving as a store of value and a potential hedge against economic instability. The U.S. government plans to hold Bitcoin as a long-term asset, not selling it and potentially utilizing it to achieve governmental objectives.
The reserve would be initially funded by the Bitcoin already seized by the U.S. government through criminal or civil asset forfeitures. The secretaries of Treasury and Commerce are authorized to develop budget-neutral strategies for acquiring additional Bitcoin, meaning they can explore ways to add to the reserve without spending additional taxpayer money.
In addition to the U.S., several other countries are accumulating Bitcoin as a strategic reserve. Countries including El Salvador, Bhutan, and China are either holding Bitcoin as a legal tender or seizing it from criminal activities. For example, El Salvador has made Bitcoin legal tender and has accumulated significant reserves. Bhutan has a state-owned Bitcoin mining operation and is accumulating reserves through this process. China has seized large amounts of Bitcoin from criminal activities and is believed to be holding a significant portion, although details have not been publicly released.
What are possible benefits of a Strategic Bitcoin Reserve?
Bitcoin, like gold, can be held as a store of value, holding its purchasing power over time, especially during periods of economic uncertainty. Adding Bitcoin to the government's assets theoretically diversifies its holdings, reducing reliance on traditional assets like the U.S. dollar, a fiat currency. Bitcoin's price can fluctuate, but some believe it can act as a hedge against inflation, since its value may rise as the value of the dollar erodes. The U.S. government may see Bitcoin as a valuable asset in its own right, potentially using it for strategic purposes in the future.
