Can Bitcoin Become a Reserve Asset for the United States? What are the Potential Implications Behind It?

With the 2024 Bitcoin Conference approaching, speculation about the possible statement from former U.S. President Trump declaring "Bitcoin as a U.S. reserve asset" is on the rise. Some are optimistic about the positive impact this news could have on the price, while others believe the likelihood of this happening is slim to none.

Trump's Shift in Cryptocurrency Policy

After Republican presidential candidate Trump expressed strong support for the crypto industry, rumors continue to circulate about Bitcoin becoming a strategic asset of the U.S. Department of the Treasury.

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All eyes are now on the Bitcoin conference scheduled for 2 p.m. EST on July 27, where Trump may make more surprising statements about Bitcoin.

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Bitcoin to Become U.S. Reserve Asset?

Asset Management Company: Shift from DOJ to Treasury Could Solve

In a CNBC interview this morning, asset management company manager Bryan Courchesne commented on the potential for Bitcoin to become a strategic reserve asset of the U.S.

He believes that while the process of using Bitcoin as a reserve asset is challenging, it is not impossible:

By simply transferring Bitcoin from the Department of Justice to the U.S. Department of the Treasury, the Treasury could embark on a long-term path of reserving this asset.

He added, "The DOJ holds about 200,000 Bitcoins, making the U.S. government the second-largest holder of Bitcoin after Satoshi Nakamoto."

Mark Cuban: Inflation and Political Instability are Contributing Factors

On the other hand, billionaire Mark Cuban stated that considering geopolitical uncertainties and the decline of the U.S. dollar as a global reserve currency, Bitcoin could indeed be the ultimate solution:

Imagine what would happen if Bitcoin became a global "safe haven"? This means Bitcoin may become a means for countries to protect assets and purchasing power.

He emphasized that such a scenario has already occurred in countries experiencing severe inflation:

If the economy ultimately develops to an unimaginable extent, Bitcoin may indeed rise to become the global reserve currency.

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However, Ari Paul, founder of BlockTower Capital, believes that the likelihood of Bitcoin becoming a U.S. reserve asset is quite low:

Even if future presidents declare that the U.S. will not sell the Bitcoins it holds, it will not become the U.S. reserve currency.

He also indicated that this proposal is suitable as a campaign slogan for Trump:

I think Trump may "say" he will do this, which will create a significant positive impact on the mid-term timeframe for Bitcoin.

What Impact Will Bitcoin Becoming a U.S. Reserve Asset Have?

Whether Bitcoin can become a reserve asset of the U.S. or globally, we can first understand the impact it will have on various levels worldwide if this were to happen.

Huge Price Boost

Firstly, by elevating its large amount of Bitcoin to reserve asset status, the U.S. will strengthen the notion of Bitcoin as "digital gold," enhancing its economic resilience and stability, diversifying national assets to combat inflation.

Additionally, as one of the world's largest economies, the U.S. taking this step will attract new investors and global attention or emulation, evidently driving up its price.

Becoming a U.S. Strategic Advantage

According to Trump's previous statements, policies against Bitcoin may indirectly benefit China, Russia, and radical communism.

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Therefore, the U.S. embracing Bitcoin will be seen as a strategic advantage for the country, similar to other scarce commodities like gold, silver, and oil reserves.

Accelerating Cryptocurrency Adoption and Regulatory Framework Development

Furthermore, this policy may lead to a more comprehensive and favorable regulatory framework for cryptocurrencies, accelerating global mainstream adoption of the technology.

However, this will also face significant challenges, especially in the technical security aspects of storing and managing large amounts of Bitcoin at a national level.

Can Trump Decide the U.S. Reserve Asset?

It is reassuring that Trump's actions indeed have a significant impact on the economy, but behind the announcement of Bitcoin as the U.S. reserve asset, it still requires extensive discussions by economic and financial experts, proposals by the Department of the Treasury and the Federal Reserve, and approval by Congress, making it a time-consuming and laborious process.

Implicitly, the president cannot unilaterally make this decision, so no matter how much support is voiced, it can only be considered as a statement of support.