President Donald Trump has found a new way to reward his supporters.
On Sunday, Trump announced in a Truth Social post that he will issue an executive order creating a “Crypto Strategic Reserve” that will include Bitcoin, Ethereum, and three other cryptocurrencies. “I will make sure the U.S. is the Crypto Capital of the World,” Trump wrote.
The announcement, which comes days before a White House crypto summit set for Friday, immediately drove up the price of bitcoin by about 10% on Sunday, while boosting ethereum 7%; though the biggest beneficiaries were Solana (up about 20%), XRP (25%), and Cardano (56%), the three lesser-known coins included in the reserve announcement.
While a strategic reserve of cryptocurrency has been floated by legislators and advocates—including Wyoming Sen. Cynthia Lummis, who has proposed a reserve specifically for Bitcoin—there is no clear reason for the government to buy these assets. The real winners are the crypto-loving Trump supporters, crypto lobbyists, and executives who will benefit from the government’s investment in their favorite coins.
While Trump has not yet issued his executive order with specifics about how this reserve would work, here’s the general idea: The government would buy up large quantities of the five named cryptocurrencies and hold them for a set number of years, placing set limits on how and when they can sell.
While Trump has not specified amounts, Lummis had proposed that the Treasury Department buy one million bitcoin, now a sum of more than $90 billion by today’s prices (one bitcoin costs about $90,000). Additionally the government would be barred from selling the coins for 20 years unless they’re spent paying down the national debt. The government already holds more than 200,000 tokens (about $18 billion) from assets seized in criminal and civil proceedings, so a reserve could mean that it is unable to sell the coins it’s already acquired.
In August, experts told Fast Company that holding volatile assets such as cryptocurrencies could create significant liabilities for the government, which is counted upon for stability in times of economic crisis. At the time, Todd Phillips, an assistant professor of law at Georgia State University, called the idea of a Bitcoin strategic reserve a “pump scheme” that would solely reward current holders.
Critics have lambasted the move as a waste of taxpayer money, especially as the government makes critical cuts to federal employment, scientific research, and international aid. “While he chokes off cancer research and fires VA researchers, the President is using your taxpayer dollars to buy crypto and enrich his personal allies,” Washington Sen. Patty Murray wrote on X on Monday.
Even some Silicon Valley mainstays who have been supportive of Trump came out against the reserve. Palantir cofounder Joe Lonsdale said that while he’s pro-crypto and supports the administration’s cost-cutting efforts, the government shouldn’t be buying crypto. “Cut it out with these schemes guys,” he wrote on X on Sunday. Investor Jason Calacanis echoed that sentiment: “It’s a terrible idea to spend tax payer money buying the crypto bags of the people who donated many millions to him,” he wrote on X. “It’s an even worse idea to pick winners like this.”
Taxation is theft. It should be kept to a minimum.
— Joe Lonsdale (@JTLonsdale) March 2, 2025
It’s wrong to steal my money for grift on the left; it’s also wrong to tax me for crypto bro schemes.
Efficient defense, courts, national parks (should fund themselves), prisons, etc – fine. Cut it out with these schemes guys. https://t.co/owIdAJvXoA
According to one preelection poll, Trump was disproportionately supported by cryptocurrency holders who supported him 12 percentage points more than his rival U.S. Vice President Kamala Harris. As such, he campaigned on the promise of boosting crypto: “You’re going to be very happy with me,” Trump told attendees at the Bitcoin 2024 conference in July. “If Bitcoin is going to the moon . . . I want America to be the nation that leads the way.”
While Trump’s crypto faithful supporters cheer the announcement, it’s clear that this isn’t about promoting economic stability or making important investments but rather rewarding a key constituency of the MAGA movement. And the American people are fronting the cost.
https://www.fastcompany.com/91289153/trumps-crypto-reserve-is-a-payoff-for-loyalists?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rssLogin to add comment
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