President Trump’s plan to create a strategic reserve of digital coins has run into a significant roadblock – and it’s called the US Congress, On The Money has learned.
After The Donald announced last weekend the creation of such a stockpile, crypto prices soared on the notion that the US government would be going into the market, buying then storing the biggest digital coins in the world, starting with Bitcoin, Ethereum, XRP, Cardano and Solana.
Then they quickly crashed because of the hard part: The president just can’t spend taxpayer money to buy the stuff; he needs Congress’s approval for new spending plans. They remain off their highs.
Trump has yet to state the size of crypto strategic reserve in his recent Truth Social posting or his past executive order on the issue, but its dimensions are likely to be far smaller for the simple reason that with a $2 trillion deficit, and $37 trillion in debt, it would be next to impossible to get even GOP lawmakers to approve using general revenues or selling trillions in debt to fund this thing, White House crypto insiders told On The Money..
That left the poor souls that make up Trump’s working group on digital assets with the arduous task of figuring out how to make their boss happy (The Donald doesn’t like to be told “no’) without begging Congress to do something they know won’t fly.
One plan that has been suggested: Using crypto the government has already seized when busting money launderers and other criminals (remember crypto is often the currency of choice for the bad guys) to seed the stockpile.
The feds have confiscated approximately 200,000 bitcoins, which President Biden was selling to pay for his vast welfare state expansion. At the current price of around $89,000, Trump would have nearly $18 billion worth of Bitcoin to play around with if he just plowed it all into his strategic reserve.
Another plan being discussed, according to crypto expert Chris Giancarlo – a senior counsel at the law firm Willkie, Farr & Gallagher and a Trump 1-appointed chair of the Commodity Futures Trading Commission – is to create a so-called sovereign wealth fund to make it happen. The White House could simply add crypto to its investments. Again, the fund would need congressional buy-in, but it’s probably an easier lift since the fund would make many strategic investments, not just digital coins.
Strategic reserves are hardly new, of course. They’re generally used by the feds to store hard assets like petroleum. But using taxpayer money, or debt, to buy hard assets can only be done through an act of Congress, as was the case in 1975 in the aftermath of the so-called Arab oil embargo over US support of Israel when we began hoarding oil.
Lawmakers approved the use of public funds to create and maintain a stockpile of petroleum for emergency purposes; it’s the largest in the world with the capacity to hold 714 million barrels, mostly underground in Texas and Louisiana.
Of course, creating a crypto reserve sidesteps the obvious question: Is hoarding crypto something that benefits the American taxpayers? Trump ran on making the US the crypto capital of the world, and advancing the so-called blockchain technology that uses digital coins may revolutionize banking and commerce.
Until that happens, crypto remains one of the most volatile asset classes in the markets. It has dubious, some would say zero, fiat value. Bitcoin founder Satoshi Nakamoto may not really exist. And why is the government hoarding something that would compete with US dollar-based assets, like the debt we need to sell?
All great questions that a White House spokesman didn’t answer when I asked. Look for some answers possibly from Trump’s Crypto Czar, David Sacks, on Friday when Trump hosts a “crypto summit” with top industry leaders at the White House.
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