Is Trump’s strategic bitcoin reserve a threat to freedom?

Donald Trump takes office with plans to make the US the bitcoin mining capital of the world. Many celebrate the idea of ​​bitcoin as one Strategic reserve asset. Supporters such as Michael Saylor, Tether and other major institutional players argue that this is a landmark achievement that solidifies bitcoin’s status as a legitimate store of value. However, this growing institutionalization risks compromising bitcoin’s original ethos as “freedom money”, with its decentralization and censorship resistance eroding under the weight of regulatory and financial control.

Centralization of Bitcoin Mining

Trump’s administration has made bitcoin mining a national priority, framing it as an opportunity to dominate the “block space.” Rachel Silverstein, US General Counsel for Bitfarmscommented on election day that, “Sanctions in my mind are a way to avoid war,” and went on to say that it is important to leave sanctions as a tool for states to use.

Bitcoin blocks have a limited capacity, which limits the number of transactions that can be included in each block. Fred Thiel, CEO of Marathon Digital, commented in an X post: “Blockroom ensures the ability to trade. Let’s keep the US as the most dominant Bitcoin mining country in the world.” This dominance could allow the United States to enforce transaction censorship via compliance with Office of Foreign Assets Control sanctions or other regulatory tools.

The precedent for such control already exists. In 2021, Marathon attempted to mine “OFAC Compliant” blocks, filtering transactions from sanctioned entities. Recently, mining pools like F2Pool have been flagged for possibly excluding sanctioned transactions. Trump’s push for mining dominance presents a clear path to institutionalize these practices by leveraging tools like the Bank Secrecy Act and FATF recommendations that promotes widespread KYC and classifies wallet software as Crypto Asset Service Providers.

The global adoption of American standards

American regulations often set the tone for the international community, especially in financial systems. For example, the FATF’s global anti-money laundering standards reflect US priorities, and its recommendations have influenced crypto regulations worldwide. Trump’s administration could use bitcoin mining dominance to propagate a framework that aligns with US geopolitical goals. Former White House cybersecurity adviser Carol House suggested in a 2023 talk that network-level censorship could serve national intereststhat demonstrates the potential to regulate bitcoin under the guise of national security.

The United States has a history of extending its financial jurisdiction beyond its borders to combat illegal activities. For example, in January 2023 the US Treasury Department’s Financial Crimes Enforcement Network identified Bitzlato Limited, a Hong Kong-registered cryptocurrency exchange, as a “primary concern for money laundering” because of its links with Russian illicit financing. This designation led to the ban on certain fund transmissions involving Bitzlato by any covered financial institution, effectively limiting its activities on a global scale.

In March 2023, the United States and German authorities shut down ChipMixera cryptocurrency service that allegedly laundered over $3 billion in crypto assets since 2017. ChipMixer was allegedly used by ransomware groups, suspected North Korean hackers, and darknet marketers to hide the origin of illicit funds. These actions show how the United States is expanding its legislative reach to enforce financial laws internationally.

Bitcoin’s strategic reserve asset

Advocates like Senator Cynthia Lummis highlight SBR as a solution to US economic challenges, claiming it could “address a meaningful portion of our debt” and strengthen global positioning. Michael Saylor, CEO of MicroStrategy, proposal goes further, suggesting that the US government should acquire 20-25% of bitcoin to “control the world reserve capital network.“

Sailors Digital Assets Framework highlights the role that criminal liability plays in enforcing compliance and transparency, ensuring that participants adhere to legal and ethical standards while minimizing fraud and misconduct. Frameworks like this can be leveraged to strengthen centralization, potentially strengthening the United States’ grip on bitcoin and transforming it from an open, neutral network into a state-created tool.

This narrative hides the dangers of institutionalizing bitcoin. Saylor has acknowledged the risks associated with not adhering to regulatory standards, stating, “I think when bitcoin is held by a bunch of crypto-anarchists who are not regulated entities, who don’t recognize the government or don’t recognize taxes or don’t recognizes reporting requirements that increase the risk of seizures.” This perspective aligns with measures like Lummis’s 2023 amendment to the National Defense Authorization Act, targeting anonymous transactions and asset mixers, and shows how the SRA framework could enforce strict oversight, reducing bitcoin’s utility as a censorship-resistant currency.

Tether

While bitcoin’s role as an SBR is gaining attention, stablecoin giant Tether is operating in parallel, profiting hugely from global instability. Reports show that Tether’s earnings in the third quarter of 2024 exceeded BlackRock’s earnings by Tether reports a net profit of $2.5 billion compared to BlackRock’s net income of $1.63 billion for the same quarter.

Tether’s significant earnings were primarily due to its investments in US Treasuries, which produced significant returns in the quarter. By backing its reserves with U.S. Treasuries, Tether inadvertently supports U.S. monetary policy while providing a stop to regions burdened by imported inflation. This perpetuates US hegemony at the cost of exacerbating global financial inequalities, making Tether a lifeline, a control mechanism and a top buyer of US debt.

Regulation and influence

Bitcoin is hailed as “freedom money,” a tool for financial sovereignty, free from government control. But as institutional actors co-opt its narrative, its fundamental properties are threatened. The Strategic Bitcoin Reserve, praised for accelerating bitcoin adoption through global game theory and increased legitimacy, also opens the door to regulatory overreach that threatens to compromise the network’s decentralization.

On a technical level, the realities of regulatory overreach can manifest in the mechanics of bitcoin mining. Miners facing regulatory compliance can increasingly prioritize compliant transactions, leaving less block space for non-compliant ones. Over time, this can increase fees for non-compliant transactions, pricing them out of the market. This creates a system where financial sovereignty remains theoretically intact but becomes practically unavailable to those unwilling or unable to meet regulatory requirements.

People like Donald Trump benefit from the systems they claim to strengthen. A few days before his inauguration, President-elect Trump launched a meme coin called $TRUMP. Announced on his Truth Social and X accounts, the coin’s value rose over 300% within hours, reaching a market cap of $8 billion.

Critics argue that such ventures prioritize hype and profit over meaningful contributions. By focusing on short-term economic gains, these efforts risk downplaying any potential and distracting from its role in promoting economic freedoms and resisting institutional control.

According to an article by Associated PressThe Trump Organization, through CIC Digital, controls 80% of the tokens with plans to release up to 1 billion over three years.

Recovering Bitcoin’s Values

The international community must scrutinize the implications of bitcoin’s institutionalization. While the SRA narrative dazzles with promises of financial stability, it risks undermining bitcoin’s core mission. Systemic reforms are needed to maintain its role as a tool for human freedom.

This may require repealing or reforming laws such as the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce during national emergencies, and the Bank Secrecy Act, which enforces strict anti-money laundering and financial surveillance measures.

Senator Mike Lee introduced Saving Privacy Act in September 2024aimed at scaling back the Bank Secrecy Act’s reporting requirements and strengthening protections for Americans’ financial data, showing growing congressional support for privacy-focused reforms.

Having a legal framework is one thing, it provides clarity, sets expectations and establishes a legal environment where people and businesses can innovate. However, the framework should not be restrictive enough to undermine bitcoin’s core principles.

As Fred Thiel’s comments remind us, “It’s about block space.” If the United States controls this resource, the ideals of financial sovereignty and permissionless innovation could be irreversibly compromised. The world faces a choice: keep Bitcoin as a decentralized network for everyone or let it become a tool of state control.