Monthly Archives: June 2024

“The Reserve is like a digital Fort Knox for the cryptocurrency often called ‘digital gold,’” Sacks wrote in a post on X. On March 7, 2025, President Donald Trump signed an executive order establishing a US Bitcoin reserve and digital asset stockpile. This decision—central to his election campaign last year—is set to transform institutional cryptocurrency investments, accelerating their growth and driving the global adoption of digital assets. A strategic reserve is a stockpile of resources and assets maintained by a government to ensure national security and economic stability in times of need.

Holders can send and receive the digital tokens to anyone anywhere in the world. However, other leaders in the industry seem frustrated by the government’s decision to not actively buy bitcoin. Cryptocurrency, especially Bitcoin, is an important tool for cybercriminals. Among the most active groups is Lazarus, the state-sponsored hacking collective for North Korea. This is the tip of the iceberg; a 2019 UN report suggested North Korea was involved in 35 hacks in 17 countries.

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Many emerging markets take out international loans in dollars, making them vulnerable to changes in US monetary policy. Transactions are often carried out in dollars, even when neither party is based in the United States. If such proposals were to materialise, the dollar would likely face some pressure as the world’s reserve currency. Countries and institutions need to trust that the currency will hold its value over time. This trust is often tied to the country’s GDP, low inflation rates, and tough financial infrastructure.

Why does Trump want one?

“China does not have the intention or the capacity to dethrone the dollar,” says CFR’s Zongyuan Zoe Liu. Most countries want to hold their reserves in a currency with large and open financial markets, since they want to be sure that they can access their reserves in a moment of need. Central banks often hold currency in the form of government bonds, such as U.S. treasuries.

Why do reserve currencies matter?

Overall, reserve currencies are an essential facet of the global financial system, providing the necessary stability, efficiency, and trust required for international economic operations. Since its inception in 1999, the Euro has gradually grown to become the second most widely held reserve currency in the world. Euro’s widespread acceptance and the economic strength of the Eurozone make it an attractive reserve currency for countries and institutions.

The British pound sterling is not a dominant reserve currency but holds a smaller share of global reserves. One of the earliest examples of this was the Roman denarius, the widely accepted currency across the Roman Empire. In more recent times, the British pound sterling was the world’s leading reserve currency during the 19th and 20th centuries, a reflection of imperial and industrial power. After two world wars, the influence of the pound sterling diminished, after the wars weakened the British economy. Tech evangelists dream of a world where cryptocurrencies such as Bitcoin replace government-backed currencies. Such digital currencies are “mined” and transferred via a decentralized network of computers without any issuing authority.

Foreign exchange reserves are assets such as foreign currency, bonds or gold. They are held by central banks and financial institutions to facilitate trade and investment or to have an effect on domestic exchange rates. The U.S dollar occupies the position of the worlds reserve money, hence countries monitor the monetary policy in the U.S to guarantee to safety of their reserves as well as guide against inflationary effects. The U.S dollar became the worlds reserve currency in 1944, this was as a result of the Bretton Woods Agreement in which 44 countries adopted the U.S dollar as the worlds reserve currency. This agreement followed the significant position held by the United States in international trade. As at this time, the U.S GDP represented 50% of the entire GDPs in the world.

• Discussions in recent years have spoken of “de-dollarisation”, through a desire to reduce global dependence on the US dollar.
• This was predominantly done through printing or more U.S dollars that were backed by its Treasury debts and not the gold reserve.
• “No active buying means this is just a fancy title for Bitcoin holdings that already existed with the government,” he said.
• Bitcoin is a digital currency and virtual payment system designed to exist outside the control of an central entity.
• Countries don’t fill out an application to have their currencies become reserve currencies, and there is no international organization that confers this status.
• This type of currency is used in international trade and investment because of its stability and acceptance worldwide.

The move came after Trump’s proposal for a crypto reserve sparked unexpected blowback from tech leaders because he initially said over the weekend that digital assets other than bitcoin would also be part of the reserve. Trump’s administration then made a distinction between the reserve and a separate stockpile. Beyond that, the precise framework of the bitcoin reserve has not been publicly disclosed, and is likely still being worked out by the newly formed President’s Working Group on Digital Asset Markets. Tasked with developing crypto regulations, the team is also evaluating the creation of a “national digital asset stockpile,” according to yet another executive order. Once a formal plan is in place, any new expenditures would need to be approved by Congress.

Emerging markets often borrow in reserve currencies like the US dollar, which makes them vulnerable to exchange rate fluctuations and US monetary policy changes, increasing the cost of debt repayments. Its findings suggest that nontraditional reserve currencies now account for almost 12% of global foreign exchange reserves. So, we know a reserve currency is a type of currency held in significant quantities by governments and institutions as part of their foreign exchange reserves.

The idea means the federal government would hold a certain amount of tokens, similar to the gold it keeps at Fort Knox. “The government will not acquire additional assets for the Stockpile beyond those obtained through forfeiture proceedings. The purpose of the Stockpile is responsible stewardship of the government’s digital assets under the Treasury Department,” he said in the post. Brian Armstrong, CEO of the cryptocurrency platform Coinbase, said on X that a bitcoin reserve is the “best option” but also suggested “a market cap weighted index of crypto assets” for people who wanted more variety in the reserve. President Trump on Thursday signed an executive order to establish a “Strategic Bitcoin Reserve” and a stockpile of U.S. digital assets. While the U.S. government does not actively purchase any cryptocurrency, it has become one of the world’s largest bitcoin holders through criminal and civil asset forfeitures by law enforcement.

When relative purchasing power parity it comes to Real World Assets (RWAs), these markets are best served by stablecoins to ensure the asset is properly priced and to facilitate efficient market operations worldwide by using a stable medium of exchange. President Donald Trump’s plan to establish a US strategic cryptocurrency reserve has sparked fresh buzz around digital assets. But financial experts say a crypto reserve is risky because digital assets such as bitcoin are notoriously volatile, swinging in value. Unlike the bitcoin reserve, which explicitly prohibits the government from selling its holdings, the order made no mention of whether or not the government can sell the cryptocurrency in the Digital Asset Stockpile. As a result, the stockpile may eventually function as a more flexible repository of confiscated cryptocurrencies, potentially allowing for future liquidations if needed.

• The idea means the federal government would hold a certain amount of tokens, similar to the gold it keeps at Fort Knox.
• This protocol would effectively reduce the influence of any one country and ostensibly would force more prudent economic policies.
• After two world wars, the influence of the pound sterling diminished, after the wars weakened the British economy.
• From the 13th century to the 15th century, the Fiorino, issued by Florence gained prominence until it was overthrown by the Ducato used in Venice.
• While traditional fiat currencies, such as the U.S. dollar, are issued by governments that can produce them as needed, bitcoin has a limited supply and is produced by computers.

Other economists disagree, arguing that there will always be winners and losers with a strong dollar. These experts contend that losses for exporters are countered by gains for importers, and that overall, the situation is a net benefit to the U.S. economy. Treasury Secretary Janet Yellen, say that the aggressive use of sanctions could threaten the dollar’s hegemony.

The U.S. dollar went off the gold standard in the 1970s, leading to contemporary floating exchange rates. But it remains the world’s reserve currency, and the most redeemable currency for global commerce and transactions, based largely on the size and strength of the U.S. economy and the dominance of the U.S. financial markets. Trump’s executive order is also expected to reshape institutional investment strategies. Wealth managers, financial nfp in trading institutions, and pension funds now face increasing pressure to expand their exposure to Bitcoin and other digital assets. Industry experts argue that the US government’s formal recognition of BTC as a strategic reserve asset removes uncertainty about regulatory risks, further legitimizing Bitcoin’s role in global finance.

Trump, Zelensky Talk Cease-Fire Conditions in Phone Call

The run on gold was so extensive that President Nixon was compelled to step in and decouple the dollar from the gold standard, which gave way to the floating exchange rates that are in use today. Soon after, the value of gold tripled, and the dollar began its decades-long decline. Sacks estimated that the U.S. government currently holds around 200,000 bitcoin (worth roughly $17.5 billion, according to current prices). Beyond Binance’s record-breaking deal, institutional investors have been actively accumulating Bitcoin and other digital assets. In manias, panics, and crashes February alone, $1.1 billion was invested in cryptocurrency firms, and in recent months, institutions, governments, and businesses have significantly increased their holdings. According to Bitcoin Treasuries, institutions now hold 3.09 million BTC—accounting for nearly 15% of Bitcoin’s total supply—a figure that continues to grow.

The new post expands the plan to include Ethereum, Solana, Ripple’s XRP, and Cardano. I don’t know who’s going to buy and hold the tokens, or even if tokens need to be bought at all, or what kind of wallet will be used, or any of the rest of it. In a sane system, we’d have an inkling of these things, but this is Donald Trump. “We’ll take in that report, and then the Secretary of the Treasury will be setting up accounts within the charging department, one for Bitcoin and one for all other digital assets,” he said. Additionally, Sacks said that each government department – including the intelligence agencies – will have to audit and “self-report” their own cryptocurrency holdings. Earlier this week, Trump revealed the names of five cryptocurrencies that he said he would like included in the strategic reserve.

Historically, successful economies – whether through trade, innovation, or military power – have garnered trust in their currencies. Those operating in the issuing country can enjoy trading without the risk of currency fluctuations as a result of conversion. Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. But for SDR to be adopted widely, economists say it would need to function more like an actual currency, accepted in private transactions with a market for SDR-denominated debt. The IMF would also need to be empowered to control the supply of SDR, which, given the United States’ de facto veto power within the organization’s voting structure, would be a tall order.

As a result, countries with large reserves typically receive preferential borrowing rates. Most international debt is held in USD to maintain stability in lending costs and expected returns. A – The US dollar has been considered as the world’s reserve currency since the mid-20th century.