New changes in the global financial order: US strategic Bitcoin reserves

Source: IOBC Capital

On March 6, 2025, US President Trump signed an executive order "Establishing a Strategic Bitcoin Reserve and a US Digital Asset Reserve". The next day, the White House Crypto Summit was held.

This is another important milestone in the crypto industry.

Bitcoin Enters the House: A New Chess Game for US Strategic Reserves

We look at this from the perspective of the US government. The purpose of the US establishing a strategic reserve of Bitcoin is to strengthen and consolidate the United States' dominant position in the global financial system.

The executive order makes it clear: "The US government currently holds a large amount of BTC, but has not yet formulated relevant policies to leverage the strategic value of these BTC in the global financial system. Just as it is in the national interest to properly manage the country's ownership and control of other resources, we must use rather than restrict the potential of digital assets to promote national prosperity."

There have been many precedents for strategic reserves in US history. For example:

Strategic gold reserves - In the 19th century, the United States implemented the gold standard, and the value of the US dollar was supported by gold reserves. In 1933, President Roosevelt signed Executive Order 6102, prohibiting private gold holdings and forcing gold to be recycled and deposited in federal savings banks; in 1934, the United States introduced the "Gold Reserve Act" to transfer gold reserves to the Treasury; in 1944, the United States passed the Bretton Woods system, promising to exchange gold at $35 per ounce, making the US dollar an international currency; it was not until 1971 that President Nixon announced the decoupling of the US dollar from gold, the Bretton Woods system collapsed, and the gold standard ended.

Strategic Petroleum Reserve--In 1974, the United States reached an agreement with Saudi Arabia and OPEC countries that international oil trade must use the US dollar, and the US dollar naturally became the global foreign exchange reserve currency; in 1975, the US Congress passed the Energy Policy and Conservation Act to establish the Strategic Petroleum Reserve (SPR). At its peak, the US SPR reserves were nearly 700 million barrels, and in 2024, the reserves dropped to 350 million barrels. On June 9, 2024, the petrodollar agreement between the United States and Saudi Arabia officially expired, and Saudi Arabia announced that it would not renew it.

Of course, there are some strategic reserves with less far-reaching impacts, including uranium, rare earths, silver, and food.

Less than a year after the end of the petrodollar system, the United States established a strategic Bitcoin reserve. It shows that the consensus on Bitcoin as "digital gold" is already very strong.

Strategic Considerations of the US Strategic Bitcoin Reserve

1. Consolidation of the US dollar's financial hegemony

For a long time, the US dollar has dominated the global financial system and is the most important settlement currency for international trade and financial transactions. However, with the changes in the global economic landscape, the rise of emerging economies, and the reshaping of the geopolitical landscape, the financial hegemony of the US dollar is facing challenges.

As a decentralized digital currency, Bitcoin has unique advantages in global circulation. Its transactions are not controlled by traditional financial institutions and governments. It can break through geopolitical restrictions and achieve fast transactions and convenient circulation around the world.

If the United States can occupy the commanding heights in the Crypto field by strengthening the connection between the US dollar and Bitcoin and Crypto, and by taking the lead in establishing a strategic reserve of Bitcoin, and incorporate the Crypto market into the US dollar settlement system, thereby consolidating the US dollar's position in international financial transactions, it will undoubtedly be another powerful defense of its US dollar financial hegemony in the new financial era.

As Trump mentioned at the White House Crypto Summit, building a Bitcoin reserve is like building a "virtual Fort Knox" (Fort Knox is a base in the United States that stores treasury gold). At the same time, he also mentioned that congressional lawmakers are pushing for bills on the regulation of stablecoins and digital asset markets, and he will ensure that the status of the dollar remains stable in the long run.

The chess has been played, and the trend has been established. From the top-level design point of view, this may be the first time that such an idea has been publicly announced. But in fact, American companies have already laid out key tracks in the field of Crypto: in terms of asset issuance - although the industry still has criticisms about the inability to achieve Trustless in the process of RWA tokenization, Franklin Templeton has become the largest traditional financial institution issuing U.S. debt RWA; in terms of asset securitization - the total asset management scale of the U.S. BTC spot ETF issued by traditional financial institutions led by BlackRock has exceeded 100 billion US dollars; in terms of asset trading and custody - Nasdaq-listed Coinbase is the main custodian of ETFs.

What is most lacking now is a set of clear regulatory bills to protect the crypto industry from similar "Biden administration's unclear border suppression" and cross-cutting, disorderly and ambiguous supervision by multiple government departments.

2. A weapon to fight inflation

In theory, establishing a strategic Bitcoin reserve can hedge inflation to a certain extent.

According to data from the World Bank, the M2 curve of the United States from 1960 to the present is as follows:

The U.S. Treasury debt scale curve is as follows:

The total U.S. federal government debt has exceeded 36 trillion U.S. dollars, a record high. Moreover, the proportion of U.S. federal government debt to GDP has continued to rise in recent years, reflecting that the debt growth rate has exceeded the economic growth rate. Due to the expansion of debt and the current high interest rate situation, the U.S. federal government's interest expenditure will reach about 882 billion U.S. dollars in 2024, and the fiscal burden is a bit heavy.

Bitcoin is "digital gold" and can be used as a potential "weapon" to fight inflation and solve the national debt problem. Governments of all countries will stimulate the economy by issuing more currency, leading to currency depreciation and inflation. The total amount of Bitcoin is constant, so it is regarded as an ideal asset to resist inflation.

There are many reasons that prompted the U.S. government to establish a strategic Bitcoin reserve. In addition to consolidating the hegemony of the US dollar and fighting inflation, from the financial innovation needs, Bitcoin and blockchain have brought new development opportunities to the financial industry; from the global financial competition, as mentioned in this executive order, "the country that takes the lead in establishing a strategic Bitcoin reserve will gain a strategic advantage"; from the interests of the US authorities, Trump is fulfilling his campaign promise, and the influence of US Crypto-related interest groups in this Trump administration has increased significantly, which has had some impact on government decision-making.

Far-reaching impact on the Crypto market

Trump's executive order is less favorable than market expectations

There are several key requirements in this executive order:

1. The Secretary of the Treasury shall establish an office to manage and control the custody account of the "Strategic Bitcoin Reserve" (SBR), which is derived from BTC held by the Treasury Department and confiscated in criminal or civil cases. BTC deposited in SBR cannot be sold.

2. The Treasury Department should set up an office to manage and control the custody account of the "U.S. Digital Asset Reserve", which is funded by all digital assets held by the Treasury Department except BTC. The Treasury Department should develop a strategy for responsible management of the U.S. digital asset reserve (it does not say that it cannot be sold).

3. The Secretary of the Treasury and the Secretary of Commerce should develop a strategy to obtain additional government BTC without increasing the budget or incurring additional costs to American taxpayers. (How to obtain more BTC? You can figure it out yourself...)

The approximately 200,000 BTC currently in the hands of the U.S. government were confiscated from criminal or civil cases. Trump asked the Secretary of the Treasury and the Secretary of Commerce to develop a strategy to "increase the holdings of Bitcoin reserves without incurring any cost to taxpayers."

The executive order plan fell short of market expectations, mainly because the community was aroused by another federal bill - the "Bitcoin Act" submitted by Senator Cynthia Lummis (proposing that the US Treasury purchase 1 million BTC within 5 years and hold it for 20 years), which has been rejected.

Crypto-related bills that are still being promoted at the federal level have a neutral impact on the market

In the United States, there are some differences between presidential executive orders (EO) and congressional legislation. Unfortunately, no Bitcoin-related bills at the federal level have been successfully legislated recently. There are currently three Crypto-related bills being promoted at the federal level:

• H.R.148：Keep your Coins Act of 2025

• S394：GENIUS Act of 2025

• HRes111：Expressing support for blockchain technology and digital assets.

Among them, HRes111 is a bit messy, with little content, and is likely to fail; Keep your Coins Act (H.R.148) proposes to protect individuals' right to self-custody of crypto assets; GENIUS (Guiding and Establishing National Innovation in U.S. Stablecoins) Act is a regulatory bill for U.S. dollar stablecoins. The content of this bill is to set licensing and reserve requirements for issuers of U.S. dollar stablecoins.

Trump said at the White House Crypto Summit that he hoped that the bill he would sign before the August recess would be the GENIUS Act. The community may not have much expectations for this bill, because it is hard to see any real benefits.

State governments' strategic bitcoin reserve bills may be expected

In addition to federal legislation, some state governments are also actively promoting the legislative process of the Startegic Bitcoin Reserve Act, such as Arizona, Texas, New Hampshire, Oklahoma, etc. Five states have already vetoed it, including Montana, North Dakota, South Dakota, Pennsylvania, and Wyoming.

The process for state governments in the United States to establish strategic Bitcoin reserve bills generally requires: first, state legislators or committees draft and submit them to the state legislature; then vote on the House of Representatives and the Senate of the state legislature; finally, if both houses of the state legislature pass it, it will be sent to the governor for signature.

The following figure shows the legislative process of the Strategic Bitcoin Reserve Act in Arizona:

The content of each state's Strategic Bitcoin Reserve Act is different. For example, Oklahoma proposes to allow the state government to invest 10% of public funds in Bitcoin or any digital asset with a market value of more than $500 billion; Kentucky proposes to invest up to 10% of the remaining cash in cryptocurrencies with a market value of more than $750 billion and stablecoins with appropriate regulatory approval.

Overall, Trump's Strategic Bitcoin Reserve EO is definitely a long-term positive.Policy-wise, as long as Trump's executive orders do not change overnight, at least the next few years will be a friendly policy environment. Fund-wise, although there is no plan to increase holdings of millions of BTC at the federal level, if the proposals of each state are passed, there may be real money investment. Market supply and demand, on the supply side, the Bitcoins confiscated by the US government are deposited into the strategic Bitcoin reserve and cannot be sold, reducing the circulation and selling pressure of Bitcoin in the market; on the demand side, the US government's strategic Bitcoin reserve decision may attract more investors' interest in Bitcoin, including some traditional financial institutions and large enterprises, which may eliminate their concerns about conducting encryption business and even lead to more countries establishing strategic Bitcoin reserves.

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Quote Michael Saylor: History will mark the moment when the US Strategic Bitcoin Reserve was established - this is a turning point in the financial and geopolitical landscape of the 21st century.