Trump’s Bold Stance: Why He’s ‘Calling’ on the US Government to HODL Bitcoin

In a surprising turn of events that has sent ripples through both the political and crypto spheres, former President Donald Trump, once a Bitcoin skeptic, has emerged as a vocal advocate for the digital currency. Imagine this: a presidential candidate not just acknowledging crypto, but actively championing it as a strategic asset for the United States! Recently, Trump publicly stated that the U.S. government should absolutely not sell its Bitcoin holdings. Let’s dive into why Trump is taking this stance and what it could mean for the future of crypto regulation and adoption in America.

Why is Trump Suddenly a Bitcoin Bull?

During a recent podcast appearance with Adin Ross, Trump didn’t just dip his toes into the crypto conversation; he jumped right in! When asked about the U.S. government’s recent Bitcoin sales and his potential crypto policy if elected in November 2024, Trump’s response was clear and decisive:

• “If elected, it will be the policy of my administration to keep 100% of all the bitcoin the U.S. government currently holds or acquires into the future.”

But it wasn’t just about holding onto Bitcoin. Trump went on to praise Bitcoin, calling it “very modern” and drawing parallels to the transformative power of artificial intelligence. He highlighted a crucial point: if the U.S. doesn’t innovate in digital assets, other nations, particularly geopolitical rivals like China, will seize the opportunity. This isn’t just about technology; it’s about global competitiveness and maintaining America’s edge in the future of finance and technology.

Just How Much Bitcoin Are We Talking About? The US Government’s Crypto Wallet

You might be wondering, how much Bitcoin does the U.S. government actually possess? Well, the numbers are quite staggering. According to Arkham Intelligence, a blockchain analytics platform, the U.S. government is a major player in the Bitcoin world, holding over 210,000 BTC in spring of this year! This makes Uncle Sam one of the biggest Bitcoin whales globally.

🇺🇸 The United States Government is the largest known holder of Bitcoin in the world.

They hold 210,000 BTC across multiple wallets, worth $14.6B at current prices.

Most of this Bitcoin was seized from Silk Road, Mt. Gox, and Bitfinex-related criminals. pic.twitter.com/lVtzCucULJ

— Arkham (@ArkhamIntel) April 12, 2024

Beyond Bitcoin, the U.S. government’s crypto portfolio also includes around $200 million in other cryptocurrencies, such as Ethereum (ETH), Tether (USDT), and Circle (USDC). However, the government isn’t just accumulating; they’ve also been moving significant amounts of Bitcoin. In June, a whopping $243 million worth of BTC was transferred from a government address to Coinbase. These funds originated from assets seized from darknet market operator Banmeet Singh, convicted of serious offenses like drug trafficking and money laundering. Further movements were observed in July, with 28,000 BTC being shifted to unknown wallets, and subsequently split into transactions of 19,800 BTC and 10,000 BTC to separate addresses.

Despite these movements, Arkham Intelligence currently estimates that the U.S. government still holds over 203,000 BTC, along with other cryptocurrencies, totaling a staggering $11.1 billion in digital assets.

From Auctions to Coinbase: How Does the US Government Sell Seized Bitcoin?

Historically, the U.S. Marshals Service (USMS) has been responsible for selling seized Bitcoin through closed auctions since 2014. These auctions were often opaque, and access was limited. However, a significant shift occurred in June when the USMS, the arm of the Justice Department handling asset forfeiture, partnered with Coinbase Prime to manage and trade its seized cryptocurrency holdings.

Why Coinbase Prime? This platform offers institutional-grade services for storing, buying, selling, and investing in cryptocurrencies. It’s also a key partner for many spot crypto ETFs, indicating its established role in the institutional crypto space. This partnership signals a more streamlined and potentially transparent approach to managing and potentially liquidating seized crypto assets in the future, although Trump’s recent statements might change this trajectory entirely.

Trump’s Vision: Bitcoin as a Strategic Reserve?

Trump’s recent pronouncements suggest a significant departure from the traditional approach of selling seized Bitcoin. At the Bitcoin 2024 conference, he floated the idea of establishing a strategic Bitcoin reserve for the United States. He emphasized Bitcoin and cryptocurrencies as vital for U.S. economic competitiveness and pledged to halt the sale of government-confiscated Bitcoin if elected.

This idea isn’t entirely new. Republican Senator Cynthia Lummis, a long-time crypto advocate, echoed Trump’s sentiment and even announced plans to propose a bill to purchase a massive 1 million BTC for the U.S. Treasury – that’s about 5% of Bitcoin’s total supply! Influential figures in the crypto world have also championed this concept. Michael Saylor, former CEO of MicroStrategy, has previously suggested an even larger purchase of 4 million BTC for the U.S. Treasury. Cathie Wood, CEO of ARK Invest, also supports Bitcoin as a reserve asset, emphasizing that it should be treated as a balance sheet asset rather than a monetary policy tool.

Who Else is HODLing? A Global Bitcoin Reserve Race?

While individuals often buy Bitcoin with their own funds, governments primarily acquire BTC through seizures from illicit activities. This makes governments some of the largest Bitcoin holders globally, albeit unintentionally in many cases. Interestingly, El Salvador stands out as the only country actively purchasing Bitcoin on the open market since 2021 and even mining it using geothermal energy through its Volcano Energy initiative.

Major nations like the United States, China, the United Kingdom, and Germany haven’t officially bought cryptocurrency. However, due to substantial confiscations, they’ve amassed billions of dollars worth of crypto assets. Bitcointreasuries estimates that combined government crypto reserves total around 517,000 BTC, valued at over $28 billion.

Why is Trump Urging to Keep, Not Sell, Bitcoin? The Strategic Rationale

The U.S. government, as the largest Bitcoin holder, and China, with estimated reserves of 190,000 BTC (largely from the PlusToken pyramid scheme seizure in 2020), are leading the pack in government-held Bitcoin. The UK follows with approximately 61,000 BTC seized in January.

Trump’s call to hold Bitcoin stems from a belief that it can become a core component of a strategic national reserve, potentially surpassing gold and silver in market capitalization. This perspective highlights Bitcoin’s potential as a modern, digital store of value in an increasingly digital world. But is Trump right? Are there downsides to this approach?

Is Trump’s Bitcoin Strategy Sound? Weighing the Pros and Cons

While the idea of a Bitcoin reserve is gaining traction, it’s not without its challenges. Bitcoin’s notorious volatility is a significant concern. El Salvador, for example, experienced a considerable drop in the value of its Bitcoin reserves due to market fluctuations. This volatility could pose risks to a national treasury.

However, Bitcoin reserves also offer potential benefits. They can serve as a diversification tool, offering an alternative asset outside traditional centralized financial systems. In an era of geopolitical uncertainty, countries might seek assets that are less susceptible to traditional financial controls. Furthermore, Bitcoin and cryptocurrencies could facilitate international settlements, potentially bypassing restrictions associated with conventional financial transactions. As the digital landscape evolves, embracing digital assets like Bitcoin might be crucial for nations to remain competitive and adapt to the future of finance. Trump’s stance, therefore, isn’t just a political statement; it’s a reflection of a growing recognition of Bitcoin’s potential role in the global economic order.