The Trump administration’s blueprint for Bitcoin reserves: may it open up a new financial paradigm in the future?

Original title:The Blueprint For A National Bitcoin Reserve

Original author: Stefanie Wayco, Matthew Catani

Original translation: vernacular blockchain

1. Trump administration’s policies

1. The Trump administration is moving towards crypto-friendly policies

U.S. President Donald Trump is gradually pushing for a government that supports cryptocurrency. One clear signal is that he appointed David Sacks as the White House commissioner for artificial intelligence and cryptocurrency.

This appointment has sparked widespread speculation: How exactly will the so-called "cryptocurrency specialist" work? Does this position have real policy-making power? Will it drive a clearer regulatory framework? Are Sacks just acting as an advisor without formal government positions and powers? Will this role lead to a new national crypto asset reserve mechanism that enables governments to hold and protect digital assets?

2. National cryptocurrency reserves: Promote the integration of supervision and blockchain technology

If the United States supports the establishment of an official cryptocurrency reserve, this could bring much-needed policy clarity to the current digital asset sector, such as clarifying which government agency regulates cryptocurrencies. This will not only help promote the full integration of cryptocurrencies in daily payments and investments, but will also promote the application of blockchain technology in large-scale government projects.

As the most widely recognized digital asset, Bitcoin has long been regarded as the industry standard, and Trump has also publicly supported calls for building strategic Bitcoin reserves.

Under the new administration, the United States has the opportunity to lead a wave of innovation and change, opening a new era with digital credit and global acceptance at its core - not just Bitcoin, but also the entire cryptocurrency ecosystem, whether they are defined as securities or commodities.

2. Digital Asset Diplomacy: How the Fed leverages cryptocurrency

1. The role of the Federal Reserve

As the central bank of the United States, the Federal Reserve is responsible for managing monetary policy, controlling inflation, regulating financial institutions, ensuring the efficient operation of payment systems, and safeguarding consumer rights.

The central characteristic of the Fed is its political independence, which allows it to focus on long-term economic stability. At the same time, it also needs to work closely with other federal agencies, such as the Treasury, the Securities and Exchange Commission and the Federal Deposit Insurance Corporation (FDIC) to provide comprehensive regulatory and financial stability.

For example, the Federal Reserve and the Treasury cooperate with the Treasury to manage government debt issuance and bond market liquidity, jointly maintain the stability of the financial market with the SEC, and cooperate with the FDIC to ensure deposit security and maintain the integrity of the banking system.

To achieve these goals, the Fed uses a variety of policy tools, including adjusting interest rates to affect borrowing costs, buying and selling Treasury bonds through open market operations to regulate market liquidity, and setting deposit reserve requirements to ensure that banks maintain sufficient liquidity.

In addition, the Federal Reserve is also responsible for overseeing the core parts of the national payment and settlement system, including electronic payment processing and money supply management. In the future, whether the Fed will further enter the cryptocurrency field and become part of US financial policies is still worth paying attention to.

2. Vision of cryptocurrency reserves

Trump’s proposed cryptocurrency reserve plan – whether to enhance financial stability, suppress inflation, manage state debt, or promote innovation – requires strategic collaboration, and the Fed is undoubtedly the most suitable institution to lead the process.

Just like its role in traditional asset management, if the Fed can participate in the management of cryptocurrency reserves, it will not only ensure that the plan meets the overall fiscal and monetary policy goals, but also directly affect its success or failure.

In addition, the new administration's acceptance of cryptocurrencies also reflects its confidence in the Federal Reserve's ability to effectively manage cryptocurrency reserves.

National cryptocurrency reserves can be regarded as strategic financial instruments similar to traditional reserve assets such as gold. Supporters believe that establishing cryptocurrency reserves will help reduce national debt, release more dollar liquidity, and establish cryptocurrencies as long-term financial assets.

Whether crypto assets are classified as securities, commodities or currencies, such reserve mechanisms may become a factor in market stability, enhance the credit and credibility of cryptocurrencies and enhance their position in the financial system.

3. Cryptocurrency: New Commodities and "Digital Gold" Standard

1. Historical background and standards of the financial system

Financial standards play a vital role in economic stability and consumer trust. Historically, the gold standard has provided a fixed framework for monetary value that anchors the value of a national currency to a specific amount of gold.

Under the gold standard system, currencies can be exchanged for gold at a fixed exchange rate, which provides stability and predictability for financial markets and international trade. Central banks maintain fiscal discipline by holding gold reserves and limiting the money supply to match the size of the gold reserves.

Today, the US government guarantees all kinds of securities through the "full faith and credit system", which can ensure the reliability of assets even without physical support. This principle refers to the government's unconditional guarantee for the performance of its debts, thereby enhancing the market's confidence in the government's issuance of securities.

For investors, national credit guarantees make investment vehicles such as U.S. Treasury bonds safer and more reliable, because these debts rely on government taxation rights or currency issuance capabilities, providing the market with a stable credit system.

From a policy perspective, the national credit system enables the government to efficiently raise funds through debt financing and support key national projects such as infrastructure construction and emergency rescue plans. At the same time, it is also the cornerstone of trust in the broader financial system, supporting various policies that promote economic growth and risk resistance.

If cryptocurrencies can gain more formal recognition under this framework, they may become a new strategic reserve asset after gold and government bonds, and even push the global financial system into the era of "digital gold".

2. Encryption plan: Going towards a clear regulatory framework

Wyoming Sen. Cynthia Lummis has been advocating for the establishment of a national Bitcoin reserve, and her plan envisions accumulating 1 million bitcoins over 20 years to hedge inflation and serve as a supplementary asset to the dollar.

The proposal includes converting the Fed's gold certificates into Bitcoin and establishing a strategic reserve that requires a holding of at least 20 years.

The future cryptocurrency regulatory framework must address the following key issues:

• Property rights and ownership protection

• Secure hosting solutions

• Which organization regulates cryptocurrencies

• When and how to determine it as a securities based on the SEC v. Howey case of the 1946 U.S. Supreme Court, and whether it should be classified as a commodity

Rumis proposed the Cryptocurrency Regulation Act aims to solve these regulatory challenges and clearly distinguish securities from commodities to simplify the compliance process for cryptocurrency companies. The bill also designs a specific funding support mechanism and regulatory framework, which plans to transfer the regulatory power of some crypto assets from the U.S. Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC).

With the rapid development of the cryptocurrency market, courts face challenges in determining whether certain digital assets are securities or commodities. There are still many vague areas for the current legal standards, and it is difficult for the industry to follow unified regulatory standards. Therefore, a clearer and more comprehensive regulatory framework is crucial.

The Howey test still applies, but the law enacted in 1946 can no longer fully apply to cryptocurrencies, after all, the courts at that time could not have foreseeed the emergence of digital assets.

While digital assets themselves are not the same as securities, if a new government strives to promote the development of the crypto industry and embraces cryptocurrency reserves, it may become a reality to establish a completely new regulatory framework to clarify the boundaries between securities and commodities.

A clearer legal standards and regulatory framework will help companies better operate cryptocurrency trading platforms, make it easier for institutional investors to participate in the market, allow consumers to buy and sell and use digital assets without worries, and continuously enhance the market's confidence and trust in cryptocurrencies.

3. Strategic oil reserve model: reference for cryptocurrency reserves

The U.S. Department of Energy (DOE) demonstrates how government maintains commodity reserves affect markets and policies by managing strategic oil reserves (SPR).

Although strategic oil reserves are mainly aimed at the energy industry and indirectly affect the majority of consumers, unlike the cryptocurrency industry, they can still serve as a basic model for building cryptocurrency reserves.

The core functions of strategic oil reserves include:

• Stabilize oil prices and prevent violent market fluctuations

• Make up for fiscal deficits and provide fiscal leverage for the government

• Enhance global market influence and provide strategic advantages in international energy game

Similar to SPR's role in energy markets and inflation regulation, cryptocurrency reserves can also affect the digital asset market and even become monetary policy tools.

In the SPR's management mechanism, the DOE is responsible for daily operations, but the President has the right to order the use of reserves, and Congress can also authorize the sale of SPR crude oil to support government spending or respond to emergencies, such as regular sales required by legislation to adjust reserve levels.

Therefore, strategic oil reserves not only affect financial and monetary policies, but also have a direct impact on energy markets, commodity prices and inflation expectations.

Likewise, cryptocurrency reserves can:

• Stabilize the crypto market and reduce price volatility

• Hedging economic instability and providing financial hedging tools

• Influence global cryptocurrency adoption and enhance the U.S. dominance in the digital asset market

How Congress authorizes SPR funds to be used in government projects, and cryptocurrency reserves may also be legislated in the future to decide how they are used.

4. Bitcoin Reserve: The Fed's New Role

If a national-level Bitcoin reserve is established, the Federal Reserve (Fed) will play a role similar to SPR in the energy market in the crypto market, while the CFTC (Commodity Futures Trading Commission) can assume a regulatory function similar to DOE, responsible for the execution and supervision of cryptocurrency reserves.

In this model, the Fed can not only:

• Strategically formulate cryptocurrency-related policies

• Manage and stabilize government-owned crypto assets

• Ensure adequate reserve assets to meet fiscal demand and generate revenue

• Protect investors' interests and ensure market stability

In addition, the Fed will retain its core functions, including:

• Set interest rates to affect market liquidity

• Borrowing and financing to promote government projects

• Use cryptocurrency as collateral assets to enhance fiscal flexibility

The bill proposed by Lummis also stressed that the U.S. Treasury will play a key role in managing and protecting Bitcoin reserves, just as it currently has a model of cooperation with the Federal Reserve.

1. The future of decentralized crypto reserves

To improve transparency and security, the government may adopt decentralized vault systems as a storage solution for national crypto-stores. The Ministry of Finance can:

• Manage and regulate the custody of crypto assets to ensure the security of national reserves

• Establish a custody mechanism that meets regulatory standards to avoid misuse of assets

• Ensure that reserves are open and transparent and comply with the market's trust mechanism in government asset management

This mechanism not only solves the problems of ownership and custody, but also enhances the public's confidence in cryptocurrencies and promotes the whole society to recognize the "full faith in crypto" of cryptocurrencies.

2. The way to weigh: efficiency, innovation and development

The concept of national cryptocurrency reserves demonstrates a vision to reshape the US economy - it combines traditional financial principles with emerging digital technologies to promote the transformation of the financial system to modernize.

However, the evolution of cryptocurrency policy marks an important turning point, which gradually transitions from Bitcoin’s initial vision of decentralization to a more regulated, government-led model.

The core challenge is: how to balance the historical concept of decentralization while ensuring users can use, invest and innovate digital assets efficiently and safely.

Even though the industry still emphasizes decentralization, its development has reached a stage where supervision is urgently needed. Faced with vague legal standards and the lack of consumer protection mechanisms, moderate government regulation and policy guidance has become inevitable. The new government's trust and support for cryptocurrencies also indicates that the policy framework is about to be implemented.

Rules are crucial because only with clear rules can market participants compete fairly.

By embracing cryptocurrencies, the new administration is expected to promote a future centered on innovation, stability and global leadership. Whether it is federal level, state government measures or regulatory reforms, the United States is standing at the crossroads of a new era of digital assets, and its strategic vision and adaptability will determine the future industry landscape.

3. Regulatory balance: Challenges and opportunities for policy advancement

Congress's approval still faces resistance. Some lawmakers have expressed concerns about economic stability and inflation, while ongoing regulatory uncertainty and public doubts may hinder the implementation of cryptocurrency reserves.

The key task of the new government is to find a regulatory balance between efficiency and innovation. Only with proper supervision can the national crypto reserves and the entire crypto industry flourish in the United States.

It is worth noting that as other countries accelerate the implementation of cryptocurrency policies, the United States may lag behind global competition if it does not take proactive measures.

Establishing cryptocurrency reserves and introducing supportive regulations will not only consolidate the U.S. leadership in the global crypto economy, but will also drive technological innovation and growth in capital investment.

4. The responsibility of the United States: Establish confidence in the global crypto capital center

The United States has always been a leader in the global capital market with high standards of consumer protection, data security and financial transaction rules.

If other countries take the lead in digital asset regulation and the United States fails to follow up, global markets may be affected by more volatile policies. Therefore, the United States should clearly express its full faith in cryptocurrencies and formulate more prudent policies as a global crypto-economic center.