Since 2024, digital assets such as BTC have gradually entered the mainstream vision and become an important topic of institutional investment and cultural discussion. In addition, with the listing and issuance of Bitcoin spot ETFs in the US securities market, the holdings of institutions and enterprises have also increased rapidly, and BTC's role as "digital gold" has been further strengthened.
Supporters generally believe that BTC can be a powerful inflation hedging tool, and its hedging ability is comparable to that of gold. At the same time, as time goes by, BTC will appreciate significantly, and more financial institutions will accept it as a means of storing value.
In the 2024 US election, Republican presidential candidate Trump publicly expressed his support for the crypto industry and proposed the idea of "establishing a BTC national reserve", which pushed BTC to the top of public opinion and ignited the crypto market's expectations for the future.
Now that the presidential election campaign has come to an end, can Trump's highly charismatic plan to "establish a BTC national reserve" be "realized"?
Review of the concept
Cynthia Lummis, a Republican senator from Wyoming, is a representative of crypto radicals who actively promotes the development of digital assets and criticizes the U.S. Securities and Exchange Commission for implementing a harsh law enforcement strategy against the crypto industry. In July 2024, Cynthia Lummis also proposed a bill related to BTC assets. The core content of the bill includes:
Propose to establish a decentralized BTC storage facility network managed by the U.S. Treasury Department (commonly referred to as BTC vault).
It is proposed that the US government purchase up to 200,000 BTC per year in the next five years, which will bring the US government's BTC reserves to 1 million BTC, which is about 5% of the total BTC supply.
It is proposed that the US government hold the above BTC for at least 20 years, and these BTC can only be used specifically to repay US debts. Within 2 years after the implementation of the bill, the US government cannot sell more than 10% of the above BTC.
It is proposed to re-evaluate the Gold Certificate and adjust the value of the Gold Certificate held by the US Federal Reserve System to the actual market value, so as to actually increase the value of assets and provide financial support for the government's acquisition of BTC.
Looking back, the BTC bill proposed by Cynthia Lummis seems to be in line with Trump's plan to "establish a BTC national reserve." After Trump won the presidential election, Cynthia Lummis also publicly expressed her excitement on social platforms.
Current Status
On October 25, 2024, Pennsylvania, the United States, passed the Bitcoin Bill of Rights (Pennsylvania House Bill 2481) with 176 votes in favor and 26 votes against, creating a new milestone in digital asset regulation.
The core provisions of the Bitcoin Bill of Rights include: individuals and businesses have the right to keep digital assets on their own, operate blockchain nodes, and trade without interference from restrictive municipal regulations.
The bill was initiated by Republican Congressman Mike Cabell and supported by both parties, reflecting the growing recognition of the potential for blockchain technology change among all parties. However, according to the media platform Forbes, all 26 votes against the Bitcoin Bill of Rights came from Democratic representatives, but well-known members of the Democratic Party supported the passage of the Bitcoin Bill of Rights and emphasized its potential to stimulate economic growth and contribute to improving financial inclusion.
Following the passage of the Bitcoin Bill of Rights, Republican U.S. Congressman Mike Cabell and another Republican Congressman Aaron Kaufer filed a legislative application for the Bitcoin Strategic Reserve Act (Pennsylvania House Bill 2664) on November 14, 2024. The bill has a core proposal: it will allow the Pennsylvania State Treasurer to allocate 10% of the general fund, emergency fund, and state investment fund to purchase BTC and trading products of digital asset exchanges, which echoes Trump's BTC national reserve plan.
According to the media platform Decrypt, if the above bill is passed, the scale of BTC acquisitions in Pennsylvania alone may be as high as US$970 million.
△ Source: Trump Digital Trading Card #10004
Possible Future
In addition to the establishment of the BTC national reserve plan advocated during the election, after winning the presidential election, the Trump team’s public support policies related to the crypto industry also include:
A position of an official in charge of digital asset policy will be established in the White House. Bloomberg reported that Trump wanted to appoint a "crypto asset czar." At present, it is not clear what kind of budget, team, and regulatory power will be allocated to this government position, but as a position within the US government, it is speculated that the primary function of this position will focus more on political affairs rather than directly participating in policy making, and officials in this position are more likely to become federal regulators and external liaisons.
Trump supporters, entrepreneurs Elon Musk and Vivek Ramaswamy will jointly lead the proposed "Department of Government Efficiency" (DOGE for short, the same name as the digital asset supported by Elon Musk, but this is not a formal federal government department) after Trump becomes president, aiming to provide advice and guidance from outside the government, promote large-scale structural reforms, and create unprecedented government entrepreneurship methods.
Although the "Government Efficiency Department" does not involve reforms to the crypto industry, after the news of the establishment of the "Government Efficiency Department" was announced on November 12, 2024, the market value of the digital asset DOGE, which has the same name as the "Government Efficiency Department", suddenly started to rise, reaching its recent highest value on November 23, 2024, an increase of about 56% compared to the market value the day before the news was announced.
In addition to political activities, after winning the presidential election, Trump's business groups have also been active in the crypto market:
According to the Financial Times, Trump's company Trump Media and Technology Group is considering acquiring Bakkt, a digital asset trading platform launched by Intercontinental Exchange, the parent company of the New York Stock Exchange.
The digital asset trading platform Bakkt is closely related to Trump's political election experience. Bakkt's first CEO was Kelly Loeffler, who was later appointed as a U.S. Senator. She is also the wife of Intercontinental Exchange CEO Jeffrey Sprecher, who is the co-chairman of Trump's inaugural committee.
On November 18, 2024, Trump Media and Technology Group submitted a trademark application for "TruthFi" to the U.S. Patent and Trademark Office. According to the content of the trademark application documents cited in media reports, the scope of use of the trademark covers digital wallets and payment services. Many industry insiders speculate that this may be a signal that Trump Business Group is ready to officially enter the field of digital asset trading services.
Questions and Challenges
On November 28, 2024, the highest price of BTC market value on that day once rose to $99,660, approaching the $100,000 mark, setting a recent historical high. Since Trump won the presidential election on November 5, 2024, the market value of BTC has risen by more than 40%.
Despite the high market sentiment, most industry insiders are betting that the Trump administration will be more friendly to the crypto industry than the Biden administration, not only will it implement more favorable regulatory measures for the development of the crypto industry, but it will also further enhance the value status of digital assets. However, there are also cautious financial scholars and industry insiders who have criticized and questioned this. They generally believe that the concept of establishing a BTC national reserve plan is groundbreaking, but it is unlikely to become a reality soon. These equally thought-provoking questioning views are concentrated in the following aspects:
BTC has limited asset stability, and so far it has not been able to show the stability required to be a reserve asset. If the government also participates in the large-scale acquisition of digital assets in its own name, it will indeed push up the market price of digital assets in a short period of time, but it is very easy to cause market distortions.
It is inconsistent with the cautious stance that the US government has taken towards the crypto industry so far. If the BTC reserve plan is put into operation, it means that there is a possibility that the US government will invest fiscal funds in the acquisition of BTC. However, such an operation is inconsistent with the cautious stance that the US government has taken towards the crypto industry at this stage, and the planning of these government funds is to transfer from relatively stable investments to the field of digital assets, which will add unnecessary risks to government finances.
There must be a huge policy shift at the regulatory level. If the BTC reserve plan is to be supported for a relatively long period of time, it not only means that there needs to be a huge policy shift at the regulatory level, but also that industry participants must change their attitude towards holding decentralized assets - from radical to conservative, from pursuing high volatility to long-term stable holding - and all of this is not an easy and simple thing that can be achieved in a short period of time.
When the government's fiscal deficit is high, it is generally not a good idea to invest in unstable assets. According to data released by the U.S. Treasury Department, in fiscal year 2024 (October 1, 2023 to September 30, 2024), the U.S. government spent $6.75 trillion and had revenue of only $4.92 trillion, with a fiscal deficit of $1.83 trillion and total government debt of $36.035 trillion, all of which set new historical records.
Trump's idea of "maybe using crypto checks or BTC to repay the U.S. government's foreign debt" expressed in a media interview during the presidential election is not easily supported by all creditors. Unless the market value of BTC tends to be extremely stable or is anchored to a value of considerable value for exchange, imagine which type of creditor would be willing to accept an asset whose value is prone to fluctuate greatly in a short period of time and whose security is obviously not high as debt repayment? In addition, the basis for the issuance of sovereign debt is the endorsement of national credit. For the "decentralization" concept upheld by the crypto industry, if a creditor really accepts the use of BTC to repay national debt, BTC will be given national credit. At the same time, BTC itself is an asset with a limited total amount. When more creditors accept BTC to repay national debts, the trend of value centralization given to BTC will become more obvious. The final result of all this is that centralized governments will be able to manipulate the actual value of BTC, which is different from the nature of a country recognizing the use of BTC as a general equivalent.
Institutional-level storage solutions may have major vulnerabilities and it is difficult to completely avoid the risk of cyber attacks. In addition, the environmental issues caused by BTC Mining in terms of energy consumption are already a controversial challenge, and vigorously promoting BTC reserves may further exacerbate these disputes.
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