A Day One Trump Order: A Federal Bitcoin Stockpile?

A couple of 50 pages politics proposal design of the plan in detail. Discussions about the circumstances with President-elect Donald J. Trump and his advisers. And talking to cabinet nominees about how to pay for it.

On the eve of Mr. Trump’s inauguration is pushing the cryptocurrency industry’s incoming administration to execute a bold plan that would have seemed unthinkable just a year ago: a government program to buy and hold billions of dollars in Bitcoin.

When he campaigned last summer, Mr. Trump to create a federal “Bitcoin repository” that would serve as a “permanent national asset for the benefit of all Americans.” Bitcoin enthusiasts hailed the idea as potentially transformative, claiming it would help reduce the national debt. Mr. Trump could still abandon the plan, and its details are under debate. But industry leaders have spent weeks lobbying to shape the proposal, raising hopes that Mr. Trump may act shortly after taking office.

In recent days, crypto executives have offered input to David Sacks, a venture capitalist whom Mr. Trump has appointed to oversee crypto and artificial intelligence, about a possible executive order covering several areas of crypto policy, three people with knowledge of the matter said. Bitcoin storage is part of those discussions, two of them said.

“This could be the Day 1 initiative,” said Pete Rizzo, editor at Bitcoin Magazine, an industry news publication. “It’s certainly an idea that has come a long way in a short time.”

By some discretionThe US owns as much as 19 billion dollars in Bitcoin that it has seized from criminals over time, a stash that the government has recently moved to sell. Some crypto bosses urge Mr. Trump to do it just hold on to that Bitcoin, which he could most likely do with an executive order. Others put forward a more ambitious plan in which the government would acquire tens of billions of dollars in new Bitcoin, building a “strategic reserve” equivalent to federal reserves of gold and oil. That amount may require congressional approval.

The profit from a Bitcoin warehouse would help save money 36 trillion dollars national debt, supporters of the plan have argued, and ensure US economic dominance if the global economy one day runs on cryptocurrencies.

But the most obvious beneficiaries would be people who already own Bitcoin, which surged to a record price of $100,000 last month. Any indication that the government plans to buy it is likely to send prices even higher. In September, Mr. Trump out his own crypto venture, World Liberty Financial.

Privately, some crypto executives say they worry the plan could make the industry appear greedy, and many financial experts have dismissed it as a self-serving stunt, noting that Bitcoin’s price has fluctuated wildly over the years.

“There is nothing strategic or sensible about this idea,” said Eswar Prasad, an economist at Cornell University. “This would certainly be great for current Bitcoin holders and just as surely a bad deal for taxpayers.”

But the mere fact that a Bitcoin warehouse is under consideration is a sign of how drastically the political winds have shifted after years of regulatory crackdown on the crypto industry.

Brad Garlinghouse, CEO of the crypto company Ripple, said in an interview that he recently had ate dinner with Mr. Trump at Mar-a-Lago and that he had encouraged the president-elect and his advisers to establish a federal warehouse containing Bitcoin and other cryptocurrencies, including XRP, a coin closely linked to Ripple’s business.

“He cares about really living up to his desired legacy of being the crypto president,” Mr. Garlinghouse.

The two 50-page proposals for the new policy, published by a Bitcoin advocacy grouphas circulated among industry leaders and Mr. Trump’s allies. And in recent weeks, Senator Cynthia Lummis, a Wyoming Republican and an outspoken crypto booster, has debated with Mr. Trump’s transition team, including cabinet nominees, a plan to buy one million Bitcoins over five years, two people with knowledge of the matter said. .

Asked to comment on this article, Brian Hughes, a spokesman for Mr. Trump’s transition team that the president-elect “will live up to his promise to encourage American leadership in crypto and other emerging technologies.”

For years, Bitcoin enthusiasts have speculated about a US government warehouse – a reserve of digital gold to go along with the nation’s holdings of actual gold. Federal authorities have accumulated about 200,000 Bitcoin in criminal seizures, including billion dollar cryptocurrency from hackers who raided Silk Road, an online drug marketplace.

But the notion that the U.S. could hold onto that Bitcoin forever or acquire more on the open market didn’t gain traction until Mr. Trump embraced crypto on the campaign trail after dismissing it as one “fraud” in 2021.

In July, shortly before he was scheduled to speak at a popular Bitcoin conference in Nashville, Mr. Trump privately with a group of crypto executives and brought up the idea of ​​a Bitcoin warehouse, said Nathan McCauley, who attended the gathering and runs Anchorage Digital, which offers storage options for digital currencies. On stage at the conference, Senator Lummis unveiled a bill that THE BITCOIN LAWthat calls for the US to buy one million Bitcoins over five years.

In his speech, Mr. Trump urging the government to buy more Bitcoin. But he promised to turn the nation’s existing holdings into the “core” of a “national Bitcoin repository” and praised the cryptocurrency as a “marvel of technology.” He seemed to double down on the promise in one interview last month on the New York Stock Exchange when asked if he wanted to create a crypto store. “Yes, I think so,” he replied.

In the industry, the loudest proponent of the idea has been David BaileyCEO of Bitcoin Magazine, which organized the Nashville conference. Mr. Bailey has credit required to help form Mr. Trump’s view of Bitcoin and said they had met last year before the conference. Recently, Mr. Bailey acted as an intermediary for crypto executives trying to reach people in Mr. Trump’s circle, said two executives familiar with the matter. Mr. Bailey declined to comment.

Mr. Trump’s remarks in Nashville instantly turned an outlandish-sounding proposal into one of the industry’s top political targets. Michael Saylor, the executive chairman of MicroStrategy, a company that owns more than $40 billion in Bitcoin, has are compared the creation of a Bitcoin reserve for the Louisiana Purchase.

“Bitcoin is a manifest destiny for the United States,” Mr. Saylor, a friend by Mr. Trump’s son Eric, said at an industry conference in November.

Recently, crypto companies have stepped up their advocacy, jockeying to take advantage of the Bitcoin storage plan, whatever form it takes.

Last month, Anchorage Digital released a white paper on how to create a Bitcoin reserve, and it plans to compete for a contract to secure the government’s crypto holdings, which could end up being overseen by the Treasury Department.

“There is a new set of people within the Treasury who would probably have this responsibility, so they need training,” Mr. McCauley in an interview. “We’re pretty deeply committed.”

Lobbying has also intensified at the state level, where well-funded crypto industry groups have often been successful in shaping laws and regulations. Legislators in Texas, Ohio, Pennsylvania, New Hampshire, North Dakota and Oklahoma has proposed bills to create government-controlled cryptocurrency reserves. Some of the language in these proposals reflects a model calculation circulated by the Satoshi Action Fund, a pro-Bitcoin nonprofit.

Dennis Porter, the group’s CEO, said in an interview that he had been working with state lawmakers across the country to promote Bitcoin stocks. Legislators in several other states are drafting legislation to establish their own reserves, he said.

“The drafts are in our inbox,” said Mr. Porter.

Erin Griffith contributed with reporting.