Is Bitcoin strategic reserve difficult to produce? Democrats are "encircling" Trump's new cryptocurrency policy

Author: Bright, Foresight News

On May 1, 2025, Senior Democratic Representative Elizabeth Warren, a senior Democratic member of the U.S. Senate Banking Committee, and five colleagues sent a joint letter to Treasury Secretary Janet Yellen, sternly pointing out that the Trump administration's plan to include crypto assets in the national strategic reserves "may pose a systemic threat to the stability of the U.S. financial system."

This 12-page letter not only lists risks such as cryptocurrency price fluctuations and regulatory arbitrage, but also publicly questioned the Trump family and the crypto industry for the first time. World Liberty Financial (WLFI), a crypto company controlled by the Trump family, issued stablecoin USD1, which was recently exposed to reaching a $2 billion investment agreement with the venture capital MGX supported by the Abu Dhabi government. In the list of shareholders disclosed on the official website of WLFI, the shareholding ratio of Trump family members is as high as 42%.

This is not the first time that the Democratic Party has launched an attack on Trump's crypto policy. As early as April 29, Maxine Waters, chief Democratic member of the House Financial Services Committee, successfully blocked the Republican-led joint hearing of the Crypto Market Structure Act on the grounds of "conflict of interest". "When the Trump family makes hundreds of millions of dollars in revenue through issuing meme coins (TRUMP) and investing in DeFi projects, any bill that attempts to relax regulation will become a tool for money laundering," she said in a letter to committee chairman Hill.

"Gene confrontation" of bipartisan crypto policy

Democrats: From "financial security" to "political liquidation"

Elizabeth Warren, as a "crypto hawk" within the Democratic Party, has a position that can be traced back to 2017. The Cryptocurrency Act, which she led at the time, attempted to include 90% of crypto assets in securities regulation, requiring exchanges to register with the SEC and disclose user information. This claim was further escalated in a joint letter in 2025, where she proposed that the size of cryptocurrency reserves should be limited to 0.5% of federal assets and mandatory that reserve assets must be held in compliant stablecoins such as USDC.

Stephanie Murphy, the Democratic leader of the House Financial Services Committee, focuses on the issue of "national security". She presented FBI survey data at a congressional hearing on April 30: Money laundering transactions through cryptocurrencies increased by 370% year-on-year in 2024, with 62% involving Russian oligarchs and Middle Eastern terrorist groups. "When the Trump family engages in crypto trading with the Middle East sovereign fund, we must be wary of whether this poses a new geopolitical risk," Murphy stressed.

As the core infrastructure of the crypto ecosystem, stablecoins have become the focus of recent game between the two parties. The Republican-led GENIUS Act attempted to establish a federal regulatory framework for stablecoin issuance, but the Democrats suddenly turned against it on May 4, with nine Democratic senators jointly opposing the existing version, demanding strengthened anti-money laundering and foreign issuer scrutiny. This shift directly led to a sharp drop in the probability of the bill passing in the Senate to 37%.

Republicans: From "innovation freedom" to "strategic layout"

In sharp contrast to the Democratic Party, the Trump administration is systematically promoting the "strategicization" of crypto assets. The executive order signed on January 24 established a digital asset working group led by AI and cryptocurrency specialist David Sacks, "crypto tsar", and required reports containing stablecoin regulatory frameworks, national crypto reserve standards, etc. within 180 days. On March 6, Trump further signed an executive order, announcing the inclusion of 200,000 Bitcoins (about 18 billion US dollars) held by the federal government into the national strategic reserves, and explored the inclusion of assets such as XRP and SOL into the reserve system.

Behind this policy shift is the Republican Party’s far-reaching layout of “digital dollar hegemony.” Analysis by strategic consulting firm Rhodium Group pointed out that Trump's new cryptocurrency policy attempts to migrate the settlement function of the US dollar from the traditional banking system to the blockchain through the "stablecoin + on-chain assets" model, thereby avoiding the impact of geopolitical friction on the status of the US dollar.

Trump's crypto policy trends directly influence market sentiment. On March 2, when the White House announced the possibility of crypto-asset reserves, the price of Bitcoin soared 12% in 24 hours, breaking the $95,000 mark. However, this optimism failed to continue. After the Democratic Party’s joint letter was exposed on April 29, the price of Bitcoin plummeted by 8% in a single day, and its market value evaporated by more than US$200 billion. On-chain data shows that WLFI sold a total of 1.28,000 ETH (about US$350 million) between March 1 and April 30, which is highly consistent with the peak of market selling pressure.

The turbulent "crypto empire"

As the trader of the family crypto business, Eric Trump's personal wealth has been deeply bound to the crypto industry. In addition to serving as the ambassador of World Liberty Financial, he also serves as an advisor to Japanese crypto giant Metaplanet and American Bitcoin mining company American Bitcoin, with a total annual salary of more than US$20 million.

This interest link has aroused strong dissatisfaction among the Democratic Party. In the joint letter, Warren bluntly stated: "When Eric Trump promoted the Dubai Crypto Tower at the Token2049 summit, he was essentially using the political capital of the president's family to harvest financially." Accountable.US, the center-left monitoring organization in the United States, called the Trump currency ranking plan "the most naked presidential corruption and wealth-making plan in American history", and believed that this would open the door for wealthy donors to facilitate their contact with the US president and also facilitate the Trump family to fill their pockets.

According to OpenSecrets data, the crypto industry donated more than $120 million to federal political candidates in 2024, with 78% of which went to the Republican Party. Leading companies such as Coinbase donated $35 million to the Trump campaign through the PAC (Political Action Committee) in exchange for policy support. This "money politics" has exacerbated Democrats' vigilance, with Rep. Brad Sherman presenting evidence at the hearing: WLFI investors include Saudi sovereign wealth funds and Russian oligarchs, which could be laundered through crypto transactions.

Silicon Valley's technology giants and Wall Street's "old money" are split in this game. BlackRock CEO Larry Fink openly supports Trump's crypto reserve plan, saying "Bitcoin is digital gold against fiscal deficits." Peter Schiff, a well-known economist and famous bull in gold, insisted that "U.S. stock index futures and the US dollar both suffered a sell-off. But gold and Bitcoin are showing a completely opposite trend again. Gold acted like safe-haven assets, up about 1%. Bitcoin traded like risky assets, down about 2%. Obviously, Bitcoin is not digital gold."

Currently, there are three key bills before the U.S. Congress: the Republican-led Crypto Market Structure Act, the Democratic Crypto Consumer Protection Act, and the bipartisan compromise Stablecoin Regulatory Framework. Analysts point out that if Trump fails to push at least one bill to pass by November 2025, the crypto industry will face a "regulatory vacuum."

May 6 is the deadline for the White House to establish strategic Bitcoin reserves and U.S. digital asset reserves orders, requiring the Treasury Secretary to submit an assessment report within 60 days. Can the Trump administration hand over this "homework" on time?