What is a Crypto Reserve?
A couple of years ago, it would have been hard to imagine the amount of political crypto news that we are bombarded with now. Committees, task forces, legislation, a crypto czar, and recently – a Strategic Bitcoin Reserve.
The US government stockpiles strategic reserves of all kinds, including gold, copper, oil, grain, and foreign currencies. The proposed Bitcoin reserve would be the first time a national government established a reserve of purely digital assets. So how would it work and how would the existence of a crypto reserve affect the cryptocurrency market?
What are strategic reserves?
Historically, many world governments maintain strategic reserves – stockpiles of critical resources that are essential to security and resilience in time of national or global emergencies. In the past, such reserves included precious metals, foreign currencies, food, medicines, energy sources, and weapons – things that are important enough to help a nation survive or get ahead of other countries in a field that ensures future survival. That’s why the establishment of a digital asset reserve would be such a big deal for the crypto industry in the United States.
What is a crypto reserve?
To create a crypto reserve, the government would have to collect a large amount of cryptocurrency and keep it secure for future use. That’s straightforward enough, but there are two main factors that have meaningful consequences for crypto:
- which cryptocurrencies are selected to be in the reserve
- how the government plans to acquire the crypto for the reserve
On March 6, 2025, President Trump established both the Strategic Bitcoin Reserve for BTC and the US Digital Asset Stockpile which would comprise multiple digital currencies other than BTC. In several followup posts on X (Twitter), the President suggested that the stockpile might include Solana (SOL), Ripple (XRP), Cardano (ADA), and Ethereum (ETH).
Why these particular cryptocurrencies? One reason might be that they are the largest cryptos by market cap that are either founded by US citizens or otherwise ‘based’ in the United States, as much as a decentralized blockchain can be. Since a national digital currency reserve may have to support national security, this could make sense.
However, the cryptocurrencies of the digital stockpile are still up for debate. At time of writing, the reserve itself is just a presidential order (meaning, not a law yet), and no acquisitions have been made either for the Bitcoin reserve or the digital asset stockpile. In fact, there may never be ANY acquisitions at all, but more on that later.
What is the purpose of a crypto reserve?
The Bitcoin and digital asset reserves were established because the current administration seems to believe that crypto is important enough to play a role in America’s security and prosperity going forward. But how does it help with that, exactly?
According to the Presidential Order itself:
- Because Bitcoin is a ‘unique store of value’ in the global financial system and ‘there is a fixed supply of BTC, there is a strategic advantage to being among the first nations to create a strategic bitcoin reserve’
- It is in the country’s interest to ‘harness, not limit, the power of digital assets for our prosperity’
In the weeks since the order was signed, the President stated on multiple occasions, and specifically in his address to the Digital Asset Summit in March 2025, that the US should place a priority on supporting the digital asset sector and positioning itself as a leader in the crypto industry.
How would the crypto reserve be used by the US, in practical terms?
One intriguing suggestion is that in a future where decentralized blockchains play a major strategic role, the US would always want to have enough crypto for transaction fees, aka gas. In this scenario, hashpower and blockspace would also become relevant to national security, so the US might allocate resources to crypto mining and staking.
For now, the crypto reserve is most likely to be used to influence global crypto prices, just like the US already does with foreign currency reserves, and as a way of signaling dominance by holding a large chunk of a limited-supply resource like Bitcoin.
Crypto reserve and crypto market
Overall, the creation of a crypto reserve should be good news for crypto prices. The reserve legitimizes the crypto industry as a whole and signals that the government is interested in supporting its development. Still, the crypto market did not necessarily respond to the reserve announcement as the crypto community hoped.
Here’s the thing — in anticipation of the announcement, many believed that if a crypto reserve was established, the government would start buying BTC and any currency that was included in the digital asset stockpile.
Instead, the executive order made it clear that the government may not be intending to buy any crypto at all. It would hold the BTC that has already been seized, keep crypto that will be obtained through any forfeiture proceedings, and maybe obtain more crypto in budget neutral ways.
If the government is only going to keep crypto acquired through forfeiture, does this mean that the coins in the digital stockpile are going to be a hodgepodge of whatever ends up in the government’s hands by chance? Or might this approach be modified in the future? If the US does decide to buy certain cryptocurrencies and those purchases are known to the public, the US government could become the ultimate crypto whale, swaying the market with its trading decisions.
Only time will tell. A national digital asset reserve is an unprecedented event in global finance and it’s exciting to see how it will shape the fate of crypto in the United States.
The MEW team talks about the crypto reserve and much more on our weekly podcast Crypto Currents – check it out, follow us on X(Twitter), and sign up for our newsletter to stay up to date with MEW and crypto news.