Trump administration’s Bitcoin reserve blueprint: Or will it open up a new financial paradigm for the future?

Written by: Stefanie Wayco, Matthew Catani Compiled by: Vernacular Blockchain

1. Trump Administration Policies

1) The Trump Administration is Moving Towards Crypto-Friendly Policies

US President Donald Trump is gradually pushing for a government that supports cryptocurrency. One clear signal is that he appointed David Sacks as the White House Commissioner for Artificial Intelligence and Cryptocurrency Affairs.

The appointment has sparked widespread speculation: How will the so-called "Crypto Commissioner" work? Does this position have real policy-making power? Will it promote a clearer regulatory framework? Is Sacks just an advisor without a formal government position and power? Will this role lead to a new national crypto asset reserve mechanism that allows the government to hold and protect digital assets?

2) National Cryptocurrency Reserve: Promote the Integration of Regulation and Blockchain Technology

If the United States supports the establishment of an official cryptocurrency reserve, this may bring much-needed policy clarity to the current digital asset field, such as clarifying which government agency regulates cryptocurrencies. This will not only help promote the full integration of cryptocurrencies in daily payments and investments, but will also promote the application of blockchain technology in large-scale government projects.

As the most widely recognized digital asset, Bitcoin has long been regarded as the industry standard, and Trump has publicly supported the call for the establishment of a strategic Bitcoin reserve.

Under a new administration, the United States has the opportunity to lead a wave of innovative change and usher in a new era centered on digital credit and global acceptance—not just for Bitcoin, but for the entire cryptocurrency ecosystem, whether they are defined as securities or commodities.

2. Digital Asset Diplomacy: How the Fed Uses Cryptocurrency

1) The Role of the Fed

As the central bank of the United States, the Federal Reserve is responsible for managing monetary policy, controlling inflation, regulating financial institutions, ensuring the efficient operation of the payment system, and safeguarding consumer rights.

The core feature of the Federal Reserve is its political independence, which enables it to focus on long-term economic stability. At the same time, it works closely with other federal agencies, such as the U.S. Treasury, the Securities and Exchange Commission (SEC), and the Federal Deposit Insurance Corporation (FDIC), to provide comprehensive supervision and financial stability.

For example, the Fed works with the Treasury to manage government debt issuance and bond market liquidity, with the SEC to maintain financial market stability, and with the FDIC to protect deposits and maintain the integrity of the banking system.

To achieve these goals, the Fed uses a variety of policy tools, including adjusting interest rates to affect borrowing costs, buying and selling Treasury bonds through open market operations to regulate market liquidity, and setting reserve requirements to ensure that banks maintain adequate liquidity.

In addition, the Federal Reserve is responsible for regulating the core parts of the national payment and settlement system, including electronic payment processing and money supply management. In the future, whether the Federal Reserve will further involve itself in the field of cryptocurrency and become part of the US financial policy remains to be seen.

2) Vision of cryptocurrency reserves

Trump's proposed cryptocurrency reserve plan - whether it is to enhance financial stability, curb inflation, manage national debt, or promote innovation - requires strategic collaboration, and the Federal Reserve is undoubtedly the best institution to lead this process.

Just like its role in traditional asset management, if the Federal Reserve can participate in the management of cryptocurrency reserves, it can not only ensure that the plan is consistent with the overall fiscal and monetary policy goals, but also directly affect its success or failure.

In addition, the new administration's acceptance of cryptocurrencies also reflects its confidence in the Fed's ability to effectively manage cryptocurrency reserves.

National cryptocurrency reserves can be seen as a strategic financial tool similar to traditional reserve assets such as gold. Supporters believe that establishing cryptocurrency reserves will help reduce national debt, release more dollar liquidity, and establish cryptocurrencies as long-term financial assets.

Whether crypto assets are classified as securities, commodities or currencies, such a reserve mechanism may become a market stabilizing factor and enhance the credit and credibility of cryptocurrencies and enhance their status in the financial system.

3. Cryptocurrency: New Commodities and "Digital Gold" Standards

1) Historical Background and Standards of the Financial System

Financial standards play a vital role in economic stability and consumer trust. Historically, the gold standard provided a fixed monetary value framework that anchored the value of a country's currency to a specific amount of gold.

Under the gold standard, currency can be exchanged for gold at a fixed exchange rate, which provides stability and predictability for financial markets and international trade. Central banks maintain fiscal discipline by holding gold reserves and limiting the money supply to match the size of gold reserves.

Today, the U.S. government guarantees various securities through the "full faith and credit system", which ensures the reliability of assets even without physical support. This principle refers to the government's unconditional guarantee to fulfill its debts, thereby enhancing the market's confidence in government-issued securities.

For investors, national credit guarantees make investment tools such as U.S. Treasury bonds safer and more reliable because these debts are based on the government's taxation power or currency issuance ability, providing a stable credit system for the market.

From a policy perspective, the national credit system enables the government to efficiently raise funds through debt financing to support key national projects such as infrastructure construction and emergency rescue plans. At the same time, it is also the cornerstone of trust in the broader financial system, supporting various policies that promote economic growth and risk resistance.

If cryptocurrency can be more formally recognized under this framework, it may become a new type of strategic reserve asset after gold and government bonds, and even promote the global financial system towards the "digital gold" era.

2) Crypto Plan: Towards a Clear Regulatory Framework

Wyoming Senator Cynthia Lummis has been advocating for the establishment of a national Bitcoin reserve, and her plan envisions accumulating 1 million bitcoins over 20 years to hedge against inflation and serve as a complementary asset to the dollar.

The proposal includes converting the Federal Reserve's gold certificates into Bitcoin and establishing a strategic reserve that requires holding for at least 20 years.

The future regulatory framework for cryptocurrencies must address the following key issues:

• Property rights and ownership protection

• Secure custody solutions

• Which agency regulates cryptocurrencies

• When and how to determine that they are securities based on the 1946 U.S. Supreme Court case SEC v. Howey, and whether they should be classified as commodities

The Cryptocurrency Regulation Act proposed by Loomis aims to resolve these regulatory challenges and clearly distinguish between securities and commodities to simplify the compliance process for cryptocurrency companies. The bill also designs a specific funding support mechanism and a regulatory framework, and plans to transfer the regulatory power of some crypto assets from the U.S. Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC).

With the rapid development of the cryptocurrency market, courts face challenges in determining whether certain digital assets are securities or commodities. There are still many gray areas in the current legal standards, and it is difficult for the industry to follow a unified regulatory standard. Therefore, a clearer and more comprehensive regulatory framework is crucial.

The Howey test still applies, but this law enacted in 1946 can no longer be fully applied to cryptocurrencies. After all, the courts at the time could not have foreseen the emergence of digital assets.

Although digital assets themselves are not equivalent to securities, if the new government fully promotes the development of the crypto industry and embraces cryptocurrency reserves, then establishing a new regulatory framework to clarify the boundaries between securities and commodities may become a reality.

Clearer legal standards and regulatory frameworks will help companies better operate cryptocurrency trading platforms, make it easier for institutional investors to participate in the market, allow consumers to buy, sell and use digital assets without worries, and continue to enhance market confidence and trust in cryptocurrencies.

3) Strategic Oil Reserve Model: Reference for Cryptocurrency Reserves

The U.S. Department of Energy (DOE) has demonstrated how government maintenance of commodity reserves can affect markets and policies by managing the Strategic Petroleum Reserve (SPR).

Although the strategic petroleum reserve is mainly aimed at the energy industry and indirectly affects consumers, which is different from the cryptocurrency industry, it can still serve as a basic model for establishing cryptocurrency reserves.

The core functions of the strategic petroleum reserve include:

• Stabilize oil prices and prevent drastic market fluctuations

• Make up for the fiscal deficit and provide fiscal leverage for the government

• Enhance global market influence and provide strategic advantages in the international energy game

Similar to the role of SPR in energy markets and inflation regulation, cryptocurrency reserves can also influence the digital asset market and even become a monetary policy tool.

In the management mechanism of SPR, DOE is responsible for daily operations, but the President has the power to order the use of reserves, and Congress can also authorize the sale of SPR crude oil to support government spending or respond to emergencies, such as regular sales required by legislation to adjust reserve levels.

Therefore, strategic petroleum reserves not only affect financial and monetary policies, but also have a direct impact on energy markets, commodity prices and inflation expectations.

Similarly, cryptocurrency reserves can:

• Stabilize the crypto market and reduce price volatility

• Hedge against economic instability and provide financial hedging tools

• Influence the global adoption of cryptocurrencies and enhance the U.S. dominance in the digital asset market

How Congress authorizes SPR funds for government projects, and how cryptocurrency reserves are used may also be determined through legislation in the future.

4. Bitcoin reserves: the new role of the Federal Reserve

If a national-level Bitcoin reserve is established, the Federal Reserve (Fed) will play a role in the crypto market similar to that of the SPR in the energy market, while the CFTC (Commodity Futures Trading Commission) can assume regulatory functions similar to those of the DOE, responsible for the execution and supervision of cryptocurrency reserves.

Under this model, the Federal Reserve will not only be able to:

• strategically formulate cryptocurrency-related policies

• manage and stabilize the government's holdings of crypto assets

• ensure that reserve assets are sufficient to meet fiscal needs and generate income

• protect investor interests and ensure market stability

In addition, the Federal Reserve will still retain its core functions, including:

• setting interest rates and influencing market liquidity

• borrowing and raising funds to promote government projects

• left;">Use cryptocurrencies as collateral assets to increase fiscal flexibility

Lummis' bill also emphasizes that the U.S. Treasury will play a key role in managing and protecting Bitcoin reserves, just as it currently does with the Federal Reserve.

1) The future of decentralized crypto reserves

In order to improve transparency and security, the government may adopt decentralized vault systems as a storage solution for national crypto reserves. The Ministry of Finance can:

• Manage and supervise the custody of crypto assets to ensure the safety of national reserves

• Establish a custody mechanism that meets regulatory standards to avoid asset abuse

• Ensure that reserves are open and transparent, in line with the market's trust in government asset management

This mechanism not only solves the ownership and custody issues, but also enhances the public's confidence in cryptocurrencies and promotes the whole society's recognition of the "full faith in crypto" of cryptocurrencies.

2) Trade-offs: Efficiency, Innovation, and Development

The idea of ​​a national cryptocurrency reserve presents a vision for reshaping the U.S. economy—it combines traditional financial principles with emerging digital technologies to modernize the financial system.

However, the evolution of cryptocurrency policy marks an important turning point, as it gradually transitions from Bitcoin’s original decentralized vision to a more regulated, government-led model.

The core challenge is how to balance the historical concept of decentralization while ensuring that users can use, invest in and innovate digital assets efficiently and safely.

Even if the industry still emphasizes decentralization, its development has reached a stage where regulation is urgently needed. Faced with vague legal standards and the lack of consumer protection mechanisms, moderate government regulation and policy guidance have become inevitable. The new government's trust and support for cryptocurrencies also indicates that the policy framework is about to be implemented.

Rule formulation is crucial because only with clear rules can market participants compete fairly.

By embracing cryptocurrencies, the new administration is expected to promote a future centered on innovation, stability, and global leadership. Whether it is federal level, state government initiatives, or regulatory reforms, the United States is at the crossroads of a new era of digital assets, and its strategic vision and adaptability will determine the future industry landscape.

3) Regulatory balance: challenges and opportunities for policy advancement

Congressional approval still faces resistance. Some lawmakers have expressed concerns about economic stability and inflation, and continued regulatory uncertainty and public skepticism may hinder the implementation of cryptocurrency reserves.

The new administration’s key mission is to find a regulatory balance between efficiency and innovation. Only with proper oversight can national crypto reserves and the entire crypto industry thrive in the United States.

It is worth noting that as other countries accelerate the implementation of cryptocurrency policies, the United States may fall behind global competition if it does not take proactive measures.

Establishing a cryptocurrency reserve and introducing supporting regulations will not only consolidate the United States’ leadership in the global crypto economy, but will also promote the growth of technological innovation and capital investment.

4) U.S. Responsibility: Build Confidence in the Global Crypto Capital Center

The United States has always been a leader in the global capital market with high standards of consumer protection, data security, and financial transaction rules.

If other countries take the lead in digital asset regulation and the United States fails to follow, the global market may be affected by more unstable policies. Therefore, the United States should clearly express its trust in cryptocurrencies (full faith in crypto) and formulate more robust policies as the center of the global crypto economy.