Analysis of US crypto strategic reserves: Which cryptocurrencies can be used as reserve assets

Author: Samson Mow, CEO of Jan3; Translated by: Golden Finance xiaozou

I've been thinking about the US Bitcoin/cryptocurrency strategic reserves lately and I think there are two possible outcomes:

Results 1: The reserve assets are only Bitcoin (BTC), and any altcoin mentioned by Trump cannot be selected; Results 2: We will accelerate into an unprecedented degradation.

First, we should solve a key problem. Why would I say that none of the altcoins mentioned by Trump can be selected for reserves? Didn’t the president just say that XRP, SOL, ADA and ETH should be included in the reserves?

Can Trump really unilaterally decide on reserve assets? I don't think so. This requires a report/proposal from the working group and then Congress needs to pass legislation.

So why did Trump say he wants to “instruct the task force to advance the strategic reserves of cryptocurrencies, including these altcoins”? Why do politicians say this? (No intention to offend politicians.)

I'm pretty sure Trump knows he can't actually make sure that these assets will be included, but he can certainly direct the task force to do something-that doesn't mean things will happen.

Some views believe that some traders benefit from opening long positions early, and these trades may be related to Trump. But the simpler possibility is that it is just to appease the lobby groups that are working to push their own cryptocurrencies into their reserves. Maybe it's to get some donations? There are certain information leaks that have given some traders the lead – but this could be information leaked by their social account managers or the platform itself.

This post by Trump may also be intended to provide some exit liquidity for Ripple or Cardano lobbyists or donors. It makes sense to pull up these cryptocurrencies now, because once a true report containing a list of cryptocurrencies or a standard is out, it 's too late. This is consistent with the reason why Trump pushed Trump Memecoin before he took office, which he could no longer do after he took office.

Who knows? Everything is possible. The only thing we are sure of is that you are not posting something for no reason to pull up some kind of cryptocurrency on a low liquidity Sunday.

One of the reasons why the United States became a major financial center is its relatively complete rule of law and guidelines for conduct make almost everything justified. That's why people from all over the world feel full of security when investing in Bitcoin Exchange-traded funds (ETFs) and securities in the United States.

If Trump can unilaterally select some altcoins to include in the national reserves, then this will be very bad for the United States. Things are no longer reasonable, but become laissez-faire.

This will take us to the second path: accelerate degradation. The impact is far more than "cryptocurrencies" and may even undermine the U.S. financial system - more serious than the poor fiscal management of the past few decades.

OK, so now let's look at the first path: Why won 't cryptocurrency reserves be included in XRP, SOL, ADA and ETH?

The reasons are as follows: The United States is an important financial center, dependent on its rule of law and its guide to action. The same applies to Bitcoin strategic reserves or cryptocurrency strategic reserves.

The presidential task force responsible for promoting cryptocurrency reserves (that Trump calls it, we'll call it in the future) needs to define many things, including the criteria for inclusion in reserves.

There must be a screening guide - because we have not taken the second path yet, we should still be able to take the rationalization path. I expect there will be a list of reserve asset inclusion requirements, just like we have the Howie test to define securities eligibility. As a reminder, Ethereum did pass the Howie test.

As the Presidential Working Group writes reports and defines which cryptocurrencies can be included in the criteria for reserves, I believe they will reach a consensus similar to the following.

‌Cryptocurrency Strategic Reserve Asset Requirements‌:

- Reserve assets must be based on Proof of Work to ensure basic integrity and immutability. Proof of Stake assets cannot be included, otherwise foreign forces only need to own the asset to gain control.

- Reserve assets must dominate their hash function to ensure resistance to attack.

- Reserve assets shall not be mined in consolidation or depend on the security of another asset.

- Reserve assets shall not be pre-mined or distributed to insiders.

- Reserve assets must have existed and operated for at least 10 years.

- Reserved assets shall not be securities, and in-depth investigation must be conducted if there are reasonable doubts.

- Reserve assets must be able to be stored securely in cold storage using multisig systems that do not involve blind signs.

- The blockchain for reserve assets must be completely complete and verifiable from the Genesis Block.

Depending on how much the United States wants to be taken seriously, there may be more conditions.

So, based on this condition list, what else can be added? It's certainly not XRP, SOL, ADA and ETH.

In addition to Bitcoin, Trump's strategic cryptocurrency reserves may also include: Litecoin and Monero

If they do not consider the dominant requirements of merge mining and hash functions, then they can also add Dogecoin and Dogecoin. Given Elon Musk's prominent position in the Trump administration, I'm sure he will find a way to find a rationalization for Dogecoin's inclusion.

In addition to which assets are eligible for inclusion in the strategic cryptocurrency reserves, there are many other questions , such as:

-Which government department will supervise reserves?

-How will reserves ensure safety? Self-storage or custody?

-What is the procurement process for assets?

So you can see that the working group still has a lot of work to do.

To avoid going on the second path, it is very important to take the screening process seriously. It should be noted that the Trump administration's cryptocurrency chief is David Sacks, who has a serious conflict of interest because he holds a large amount of Solana. Even without David’s consideration, people’s perception is important because it is not possible to feel that assets are carefully selected to benefit certain individuals or companies.

So, the conclusion is:

-Trump cannot arbitrarily select assets included in the strategic reserves of cryptocurrencies.

- There will be a report or proposal that lists the criteria for inclusion in the reserve and then requires Congressional approval.

- It is almost impossible for them to develop a serious set of standards that allow altcoins like XRP to pass while excluding any meme.

- Cryptocurrency reserves may be primarily Bitcoin and a few other Proof of Work (PoW) currencies.

- Cryptocurrency reserves are likely to be established, as Trump seems determined to fulfill his “cryptocurrency capital” promise.

-If cryptocurrency reserves are filled with altcoins, then be prepared for an unprecedented accelerated degradation.

Please make plans based on this.