Federal Reserve Chairman Jerome Powell made it clear that the Federal Reserve has no plans to stockpile Bitcoin, causing the crypto market to plummet. However, a recent report has revealed that President Trump could bypass the Fed and create a Bitcoin Strategic Reserve using the Exchange Stabilization Fund controlled by the Treasury Department. This fund, created to stabilize the U.S. dollar, does not currently hold Bitcoin, but Trump could issue an executive order to change that.
While this executive order would be a quick solution, it is not foolproof. Executive orders can be undone by future administrations. Alternatively, Republican Senator Cynthia Lummis has proposed legislation, the “U.S. Bitcoin Strategic Reserve Act”, which would need approval from both the House and Senate before being signed into law by Trump. This legislative route offers more stability for Bitcoin as a strategic asset in the U.S. financial system.
Despite the potential legal paths for creating a Bitcoin reserve, the Federal Reserve has shown no interest in purchasing Bitcoin. Powell stated that the Fed is not the place for Bitcoin, leaving the Treasury as the only viable option for a government-led Bitcoin reserve. With Trump’s strained relationship with Powell and his interest in Bitcoin, it is likely that he will pursue establishing a Bitcoin Strategic Reserve through the Treasury Department.
Trump’s family crypto project, World Liberty, quickly reacted to Powell’s remarks by purchasing altcoins after the press conference. Although these altcoins initially saw losses, it is clear that Trump is interested in the cryptocurrency market. Overall, the potential creation of a Bitcoin reserve by Trump could have significant implications for the future of Bitcoin in the U.S. financial system.
