If elected, Donald Trump promises to “keep 100% of all the bitcoin the US government currently holds or acquires,” serving as the core of a strategic national bitcoin stockpile.
The US has the largest known holding of bitcoins of any government, estimated at over 210,000 bitcoins ($11.5bn) or 1% of total supply. Most of this bitcoin traces its origin to the 2013 shutdown of the Silk Road, a dark web marketplace where users could trade bitcoins for anything illicit. Somewhat ironically, Trump reiterated his pledge to free Ross Ulbricht, creator of the Silk Road.
The US has already sold 195,000 bitcoins (now worth $10.7bn) receiving a total of $366m. This, in Trump’s words, violated the cardinal rule that every Bitcoiner knows: “Never sell your bitcoin.”
Bringing regulatory clarity to the crypto industry
Trump has promised to bring regulatory clarity to the historically unregulated cryptocurrency industry. The first step would be appointing a Bitcoin and cryptocurrency presidential advisory council, which would be given 100 days to create “transparent regulatory guidance for the benefit of the entire industry”.
Trump vowed to fire Gary Gensler, chairman of the Securities and Exchange Commission (SEC). Under Gary Gensler, the SEC has been accused of “regulation by enforcement”, that is imposing penalties without providing explicit regulatory guidance beforehand.
Brian Armstrong, CEO of Coinbase, identified regulatory clarity as the “biggest blocker for institutions to invest more substantially in crypto” during the company’s Q2 earnings call. A GlobalData survey found that 26% of individuals globally would be extremely likely or very likely to invest in cryptocurrencies if the industry were more regulated.
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By GlobalDataTrump aims to extend US dollar dominance with stablecoins
As part of increasing regulatory clarity, Trump promised to create a framework to enable the expansion of stablecoins with the hopes of extending the “dominance of the US dollar to new frontiers”. USD-pegged stablecoins are gaining adoption in nations experiencing high inflation and provide a new source of demand for the United States’ debt.
US Treasuries are the ideal asset for backing a dollar stablecoin; they offer a dollar-denominated return with minimal risk and are high liquidity. Launched in 2014 by Tether, USDT is the first and largest stablecoin. As per its Q2 2024 attestation, Tether owns a reserve of $98bn in US Treasuries—more than Germany, Australia, and the UAE.
New demand for Treasuries will help the US refinance its compounding $35trn of national debt, especially if China and other BRICS nations continue to offload US Treasuries.
A stop to central bank digital currencies (CBDCs)
In contrast to Trump’s endorsement of stablecoins, he promised “There will never be a CBDC while I’m president of the United States”. A CBDC is similar in principle to a stablecoin except that it is issued by a nation’s central bank instead of a private sector company. They are often criticised as being Orwellian, for giving governments greater powers to surveil and seize funds. However, leading stablecoins USDT and USDC both contain functionality for freezing users’ funds and can also be easily traced.
RFK: Trump’s competitor as the pro-crypto candidate
Independent presidential candidate Robert F. Kennedy Jr. also spoke at the Bitcoin 2024 conference. Going a step further than Trump’s proposed strategic bitcoin stockpile, RFK pledged to sign an executive order directing the US Treasury to buy 550 bitcoins (currently $30m) daily until the US had accumulated a minimum of four million bitcoins (worth $219bn at the time of writing), roughly 19% of the total supply of bitcoin. Matching the United States’ possession of 19% of the world’s gold supply.
RFK has also committed to exempting bitcoin transactions from taxation, enabling bitcoin holders to realise their profits without paying capital gains tax. This policy would arguably have a greater impact on the average American Bitcoiner than the establishment of a strategic bitcoin reserve.
