Concerns Over the U.S. Government Acquiring Bitcoin

One might think that virtually all Bitcoiners would be thrilled about the notion of the U.S. government acquiring BTC (and perhaps a basket of other cryptoassets) and effectively ratifying it as a global asset of consequence. However, I count myself among the few holdouts who don’t see the development as positive for either Bitcoin or the U.S. government itself. Here are eight reasons why I don’t support the policy.

1. Easily Done is Easily Undone

If Bitcoiners want a reserve to last, they should want Trump to seek Congressional authorization for a purchase (as is customary for any large outlay). If it is done solely by executive fiat, the next administration will not feel bound by the policy, and could trivially reverse it (and nuke the market in the process). If Bitcoiners sincerely believe it benefits the U.S. to acquire bitcoin and hold it for a long period, then they would have no issue insisting that the government pass a law authorizing spending for the Reserve, rather than having Trump enact the policy unilaterally.

The fact that many Bitcoiners are hoping that Trump makes the policy without asking Congress for approval shows that they are chasing a short-term pump, rather than actually being sincere about the long-term value of the Reserve for the U.S. A future Democratic administration will have no qualms about immediately divesting the Reserve.

2. The Global Reserve Issuer Should Not Disrupt Itself

The U.S. is the issuer of the global reserve currency. We still don’t know how the Crypto Reserve will be positioned – as simply an investment fund, or something more inherent to the dollar, such as a new commodity-based currency system like the old gold standard.

If the Crypto Reserve is contemplated as providing a new backing for the dollar, I believe this will cause significant unease in dollar and Treasury markets. Effectively, the government will be signaling that it believes it no longer has faith in the dollar system as it currently exists, and a radical change is needed. This would likely cause already-high rates to rise, as the market starts to wonder whether the U.S. is contemplating a default on its debt. The government should be focused on shoring up investors’ faith in its ability to sustain its debt obligations by pursuing pro-growth and deficit-reducing policies.

Many Bitcoiners don’t buy this line of reasoning and simply want to accelerate the collapse of the dollar. I view this as a kind of financial terrorism. I don’t believe in financial accelerationism, nor do I think bitcoin – or any other cryptoasset – is ready to serve as the backing of a new commodity standard for the dollar.

3. The U.S. Already Has Plenty of Exposure to Bitcoin

American funds and individuals hold more Bitcoin than the citizens of any other country on the planet – almost certainly by a large margin. The U.S. government already benefits from this state of affairs. When Bitcoin goes up, those Americans who realize their gains owe taxes to the government, either 20% or 40% of their gains based on how long they have held the position.

This is a meaningful point not to be overlooked. The U.S. already benefits when Bitcoin goes up through tax realizations – more than any other country. Given this, do we really need to pick a massive fight and insist that the U.S. government gains direct exposure for these assets, too? No one is pushing for the U.S. government to acquire Apple or NVIDIA stock. Why Bitcoin?

4. No “Strategic” Value in a Crypto Reserve

Generally, assets and commodities that the U.S. acquires at the government level are required in a pinch, and have to be accumulated ahead of time. The Petroleum Reserve is a good example, as oil is clearly an essential commodity. We also maintain reserves of other sorts of strategic assets, such as medical supplies, rare earth minerals, helium, and agricultural commodities. These all have clear and obvious purposes: creating a reserve that can be dipped into in a time of emergency.

There is no obvious strategic use for bitcoin (and certainly not Cardano or Ripple). Ordinary Americans do not need a “supply” of bitcoin or any other cryptoasset to support their quality of life. The only “strategic” use for bitcoin is simply going “long” the asset at the state level, but you could accomplish this with any financial asset.

Of course, if you’re going to ultimately back the dollar with bitcoin in some kind of neo gold standard, then it would have a strategic use. But I don’t think that is the intent right now.

5. A Crypto Reserve Dilutes the Value Proposition of Bitcoin

Mixing Bitcoin in with rival cryptoassets like Ethereum, Cardano, Solana, and XRP devalues Bitcoin and makes it look undifferentiated from these assets. Bitcoin is the only one of the bunch with a credible supply schedule and genuine decentralization at the protocol level. A crypto reserve confuses the issue and devalues Bitcoin in the public eye. Principled Bitcoiners should push for an all-or-nothing approach; either just Bitcoin, or no reserve.

6. Bitcoin Does Not Need the Government

I wonder what early libertarian Bitcoiners from 2012-16 would think of 2025 Bitcoiners pushing for the government to backstop the value of their coins. Bitcoin has been one of the best performing investments in history, monetizing from nothing in 2009/10 to trillions of dollars in aggregate value in 2025. It has done all of this without government support and often despite hostility from nation-states. A Crypto Reserve would transform Bitcoin from an apolitical asset into the plaything of the government, subject to political cycles. Bitcoiners were never ones to hitch their wagon to the government, and they shouldn’t start now.

7. Turning Americans Against Bitcoiners

Only a fraction (between 5-20%) of Americans own bitcoin, and even fewer own other cryptoassets. Many Bitcoiners are wealthy due to their historical investments. At a time when government spending is under scrutiny, using taxpayer dollars to bolster the price of Bitcoin will be politically unpopular. Biden’s proposed student loan amnesty met with resistance; a similar backlash is likely for Bitcoin acquisition using taxpayer dollars.

8. It Looks Self-Interested

Trump and his cabinet have ownership in various cryptoassets, including an NFT project built on ETH. Using government resources to directly increase the value of coins that Trump and his associates hold raises concerns. Most people in crypto are asking for reasonable policies and rules, but Trump’s proposal seems to go much further, potentially enriching himself and his associates. Critics may view this as corrupt and undermine trust in pro-crypto efforts, allowing future administrations to reverse progress in the crypto space.