New changes in the global financial order: US strategic Bitcoin reserves

Author: OxCousin, IOBC Capital On March 6, 2025, US President Trump signed an executive order "Building Strategic Bitcoin Reserves and U.S. Digital Asset Reserves." The next day, another White House crypto summit was held.

This is another important milestone in the crypto industry.

Bitcoin enters the house: New chess game in the United States

We look at this from the perspective of the US government. The purpose of the United States to establish its strategic Bitcoin reserve is to strengthen and consolidate the United States' dominance in the global financial system. The executive order made it clear: "The U.S. government currently holds a large amount of BTC, but has not yet formulated relevant policies to leverage the strategic value of these BTCs in the global financial system. Just as it is in the national interest to properly manage the ownership and control of other resources of the state, we must leverage, not limit the potential of digital assets to promote national prosperity." There have been many precedents of strategic reserves in the history of the United States. for example: Strategic Gold Reserves - In the 19th century, the United States implemented a gold standard, and the US dollar value was supported by gold reserves. In 1933, President Roosevelt signed Executive Order No. 6102, prohibiting private holdings of gold, forcibly recovering gold and depositing it into the Federal Savings Bank; in 1934, the United States introduced the Gold Reserve Act, handing over gold reserves to the Ministry of Finance; in 1944, the United States passed the Bretton Woods system, promising to exchange gold for $35 per ounce, making the US dollar an international currency; it was not until 1971 when Nixon President announced the decoupling of the US dollar from gold, the Bretton Woods system collapsed, and the gold standard ended. Strategic Petroleum Reserves - In 1974, the United States reached an agreement with Saudi Arabia and OPEC countries. The international trade of oil must use the US dollar, and the US dollar naturally became the global foreign exchange reserve currency; in 1975, the US Congress passed the Energy Policy and Savings Act to establish the Strategic Petroleum Reserve (SPR). At its peak, the US SPR reserves were nearly 700 million barrels, and the reserves dropped to 350 million barrels in 2024. On June 9, 2024, the petrodollar agreement between the United States and Saudi Arabia officially expired, and Saudi Arabia announced that it would not renew it. Of course, there are some strategic reserves with less far-reaching impacts, including uranium, rare earths, silver, grain, etc. Less than a year after the petrodollar system ended, the United States established a strategic Bitcoin reserve. This shows that the consensus on Bitcoin’s “digital gold” is already very strong. Strategic Considerations for US Strategic Bitcoin Reserves

1. Consolidation of US dollar financial hegemony

For a long time, the US dollar has dominated the global financial system and is the most important settlement currency for international trade and financial transactions. However, with the changes in the global economic landscape, the rise of emerging economies, and the reshaping of the geopolitical landscape, the US dollar's financial hegemony is facing challenges. As a decentralized digital currency, Bitcoin has unique advantages in global circulation. Its transactions are not controlled by traditional financial institutions and governments. It can break through geopolitical restrictions and achieve rapid transactions and convenient circulation around the world. If the United States can occupy a commanding height in the Crypto field by strengthening the connection between the US dollar and Bitcoin and Crypto by taking the lead in establishing a strategic reserve of Bitcoin, and incorporate the Crypto market into the US dollar settlement system, thereby consolidating the US dollar's position in international financial transactions, it will undoubtedly be another strong defense of its US dollar financial hegemony in the new financial era. As Trump mentioned at the White House Crypto Summit, establishing Bitcoin reserves is to establish "virtual Fort Knox" (Fort Knox is a base in the United States that stores treasury gold). At the same time, he also mentioned that Congressional lawmakers are pushing bills on the regulatory clarity of the US dollar stablecoins and digital assets markets, and he will ensure that the US dollar 's status remains stable for the long term. The chess has fallen and the momentum has been accomplished. From the top-level design perspective, this may be the first time that such an idea has been publicly announced. But in fact, American companies have In the Crypto field, it has laid out a key track: Asset issuance - Although there are still criticisms in the industry for the inability to realize Trustless during the tokenization of RWA, Franklin Templeton has become the largest traditional financial institution to issue U.S. bonds RWA; in terms of asset securitization - The total asset management scale of the US BTC spot ETF issued by traditional financial institutions led by BlackRock has exceeded US$100 billion; in terms of asset trading and custody - Nasdaq listed company Coinbase is the main custodian of ETFs. What is most lacking now is a set of clear regulatory bills to protect the crypto industry from "suppression of the Biden administration's unclear borders" in the future, as well as the cross, disorderly and fuzzy supervision of multiple government departments.

2. A powerful tool to fight inflation

Theoretically, establishing strategic Bitcoin reserves can hedge inflation to a certain extent. According to the World Bank, the M2 curve of the United States from 1960 to the present is as follows: The scale curve of the US Treasury bond is as follows: The total U.S. federal government debt has exceeded $36 trillion, a record high. Moreover, the proportion of US federal government debt to GDP has continued to rise in recent years, reflecting that debt growth rate exceeds economic growth rate. Due to the expansion of debt and the current high interest rate situation, the U.S. federal government's interest expenditure reached about $882 billion in 2024, which is a bit large in fiscal burden. Bitcoin is "digital gold" that can be used as a potential "weapon" to fight inflation and solve the Treasury bond problem. Governments in all countries will stimulate the economy by issuing more currencies, resulting in currency depreciation and inflation. The total amount of Bitcoin is constant, so it is regarded as an ideal asset to resist inflation. There are many reasons that prompted the U.S. government to establish strategic Bitcoin reserves. In addition to consolidating the hegemony of the US dollar and fighting inflation , from the perspective of financial innovation demand , Bitcoin and blockchain have brought new development opportunities to the financial industry; starting from the global financial competition , just as mentioned in this executive order, "the countries that are the first to establish strategic Bitcoin reserves will gain strategic advantages"; from the perspective of the interests of the US authorities , Trump is fulfilling his promises during the campaign , and the influence of the relevant interest groups in the Trump administration team has been significantly improved, which has had some impact on government decision-making.

The profound impact on the Crypto market

Trump 's executive order is less favorable than market expectations There are several key requirements in this executive order: 1. The Minister of Finance shall establish an office responsible for the management and control of the escrow account of the Strategic Bitcoin Reserve (SBR), which is derived from BTC held by the Ministry of Finance for confiscation in criminal or civil cases. BTC deposited into SBR shall not be sold. 2. The Ministry of Finance should set up an office to manage and control the escrow account of the "U.S. Digital Asset Reserve", which is derived from all digital assets held by the Ministry of Finance except BTC. The Treasury Department should formulate a strategy to manage the U.S. digital asset reserves responsibly (it's said it can't be sold). 3. The Secretary of the Treasury and Commerce should develop strategies to obtain additional government BTC, and cannot increase the budget and cannot bring additional costs to US taxpayers. (How to get more BTC in detail? You can find a way for yourself...) The US government's existing 200,000 BTC were confiscated from criminal or civil cases. Trump asked the Treasury Secretary and Commerce Secretary to formulate a strategy to "increase the holdings of Bitcoin reserves without incurring any costs to taxpayers." The executive order's plan was less than market expectations, mainly because the community was stolen by another federal-level bill -the "Bitcoin Act" submitted by Senator Cynthia Lummis (proposed that the US Treasury Department purchase 1 million BTC within 5 years and hold it for 20 years) , has been rejected. Crypto-related bills that are still being promoted at the federal level have a neutral impact on the market In the United States, there are still some differences between the Executive Order (EO) and Congressional Legislation. Unfortunately, the recent federal-level Bitcoin-related bills have not been successfully legislated. There are three Crypto-related bills currently being promoted at the federal level:

• HR148: Keep your Coins Act of 2025
• S394: GENIUS Act of 2025
• HRes111: Expressing support for blockchain technology and digital assets.

Among them, HRes111 is a bit foolish and has no content, and it is likely to fail; Keep your Coins Act (HR148) proposes to protect individuals' self-custody of crypto assets; GENIUS (Guiding and Establishing National Innovation in US Stablecoins) Act is a regulatory bill for US dollar stablecoins. The content of this bill is to set licensing and reserve requirements for US dollar stablecoins issuers. At the White House crypto summit, Trump said that he hopes to send it to his desk before the recess in August to sign the GENIUS Act . Maybe the community doesn’t expect much from this bill because it really doesn’t show any substantial benefits. The strategic Bitcoin Reserve Act of state governments may be expected to be in addition to federal legislation, some state governments are also actively promoting the legislative process of Startegic Bitcoin Reserve Act, such as Arizona, Texas, New Hampshire, Oklahoma, etc. Five states have also rejected it, including Montana, North Dakota, South Dakota, Pennsylvania, and Wyoming. The process for the establishment of a strategic Bitcoin reserve bill by state governments in the United States generally requires: first drafting by state legislators or committees and submitting it to the state legislature; then voted by the House and Senate of the state legislature; finally, if both houses of the state legislature pass, they will be submitted to the governor for signature. The following figure shows the ongoing process for the strategic Bitcoin Reserves Act legislation in Arizona: The content of each state's strategic Bitcoin reserve bill is different, for example: Oklahoma is a proposal to allow the state government to invest 10% of public funds in Bitcoin or any digital asset with a market capitalization of more than $500 billion; Kentucky is a proposal to invest up to 10% of the remaining cash in cryptocurrencies with a market capitalization of more than $750 billion and stablecoins with appropriate regulatory approval. Overall, Trump 's strategic Bitcoin reserve EO will definitely be a positive in the long run . On the policy side , as long as Trump’s executive orders do not change every day, at least the next few years will be a friendly policy environment. On the capital side , although there is no plan to increase the holdings of millions of BTC at the federal level, if the proposals are passed or there are real silver investments. On the supply and demand side of the market , on the supply side , the US government’s confiscated Bitcoin deposits are deposited into the strategic Bitcoin reserves and cannot be sold, reducing the circulation and selling pressure of Bitcoin in the market; on the demand side , the US government’s strategic Bitcoin reserve decisions may attract more investors’ interest in Bitcoin, including some traditional financial institutions and large enterprises, which may eliminate concerns for their crypto business and may even trigger more countries to establish strategic Bitcoin reserves.

Ending

Quote Michael Saylor: History will engrave the moment when the US strategic bitcoin reserve is established - this is a turning point in the financial and geopolitical landscape in the 21st century.