4 ms·

They would borrow dollars to buy crypto, thus increasing government debt.

rtkwe 2y ago
Could they take any currently seized bitcoins and just shuffle that sideways into a reserve? It'd break the main point of this though which imo is to boost the price of various crypto assets they're probably flush in since the Trump family personally just did two back to back memecoin rug pulls.
- nickthegreek 2y ago
  I believe that would be considered a stockpile. A reserve would mean new purchases. https://www.npr.org/2025/03/04/g-s1-51748/trump-crypto-reserve-bitcoin-stockpile-ether https://www.npr.org/2025/03/04/g-s1-51748/trump-crypto-reser...
  - rtkwe 2y ago
    In that vein the actual order never uses the phrase 'reserve' only stockpile. I'm not sure it would rule it out though you could start it with the existing assets and then actively manage it like a reserve. https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/ https://www.whitehouse.gov/presidential-actions/2025/01/stre...
    - nickthegreek 2y ago
      I think one requires congressional approval (reserve), the other does not (stockpile).
      - rtkwe 2y ago
        I mean they're not exactly following the separation of powers right now...
- rtkwe 2y ago
  Another possible goal is to try to hamper any regulatory or legislative threats to crypto since it would affect a 'strategic resource'.
kjksf 2y ago
Buying Bitcoin is neutral to spend (or "debt" in your framing). If you "borrow" $100 and "buy" $100 with it, nothing has changed. You didn't spend anything hence you didn't incur any additional debt. If you buy $100 equivalent of Bitcoin then nothing changes either. Only future changes in Bitcoin price relative to dollar are changing your "debt". If price of Bitcoin goes down, you have a paper loss. If price of Bitcoin goes up, you have a paper gain. When you convert Bitcoin back to dollars, that paper gain or loss converts to a smaller or bigger debt. Strategic Bitcoin Reserve is motivated by the belief that the price of Bitcoin will go up drastically in which case the more Bitcoin U.S. buys today, the more debt it'll be able to reduce in the future.
- spankalee 2y ago
  All it does it turn the government into a hedge fund making bets, while paying off crypto holders with taxpayer money along the way.
  - kjksf 2y ago
    The same argument applies to gold i.e. governments and central banks buying gold is just like a hedge fund making bets while paying off gold retail holders with taxpayer money. This is Status Quo Bias. If you accept that Bitcoin, like gold, is a hedge against devaluing currency, then it makes sense for China or US to stock up on Bitcoin just like they stock up on gold. Unlike gold, Bitcoin has a non-zero chance to supplant (or at least become a viable alternative to) US dollar as a global currency. In which case it's strategic for a country to own as much of such asset as possible.
- Aurornis 2y ago
  > If you "borrow" $100 and "buy" $100 with it, nothing has changed. You didn't spend anything hence you didn't incur any additional debt This is incorrect. You’re confusing a neutral net worth with a lack of debt. They’re not equivalent. If you borrow $100 then you have incurred $100 of debt. It doesn’t matter if you still have $100 in your hand, you still have $100 of debt to service. That last part is important: The government would have to service the interest on the money they borrowed. As time went on, the effective size of the debt will grow.

Could they take any currently seized bitcoins and just shuffle that sideways into a reserve? It'd break the main point of this though which imo is to boost the price of various crypto assets they're probably flush in since the Trump family personally just did two back to back memecoin rug pulls.

nickthegreek 2y ago
I believe that would be considered a stockpile. A reserve would mean new purchases. https://www.npr.org/2025/03/04/g-s1-51748/trump-crypto-reserve-bitcoin-stockpile-ether https://www.npr.org/2025/03/04/g-s1-51748/trump-crypto-reser...
- rtkwe 2y ago
  In that vein the actual order never uses the phrase 'reserve' only stockpile. I'm not sure it would rule it out though you could start it with the existing assets and then actively manage it like a reserve. https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/ https://www.whitehouse.gov/presidential-actions/2025/01/stre...
  - nickthegreek 2y ago
    I think one requires congressional approval (reserve), the other does not (stockpile).
    - rtkwe 2y ago
      I mean they're not exactly following the separation of powers right now...
rtkwe 2y ago
Another possible goal is to try to hamper any regulatory or legislative threats to crypto since it would affect a 'strategic resource'.

kjksf 2y ago

Buying Bitcoin is neutral to spend (or "debt" in your framing). If you "borrow" $100 and "buy" $100 with it, nothing has changed. You didn't spend anything hence you didn't incur any additional debt. If you buy $100 equivalent of Bitcoin then nothing changes either. Only future changes in Bitcoin price relative to dollar are changing your "debt". If price of Bitcoin goes down, you have a paper loss. If price of Bitcoin goes up, you have a paper gain. When you convert Bitcoin back to dollars, that paper gain or loss converts to a smaller or bigger debt. Strategic Bitcoin Reserve is motivated by the belief that the price of Bitcoin will go up drastically in which case the more Bitcoin U.S. buys today, the more debt it'll be able to reduce in the future.

spankalee 2y ago
All it does it turn the government into a hedge fund making bets, while paying off crypto holders with taxpayer money along the way.
- kjksf 2y ago
  The same argument applies to gold i.e. governments and central banks buying gold is just like a hedge fund making bets while paying off gold retail holders with taxpayer money. This is Status Quo Bias. If you accept that Bitcoin, like gold, is a hedge against devaluing currency, then it makes sense for China or US to stock up on Bitcoin just like they stock up on gold. Unlike gold, Bitcoin has a non-zero chance to supplant (or at least become a viable alternative to) US dollar as a global currency. In which case it's strategic for a country to own as much of such asset as possible.
Aurornis 2y ago
> If you "borrow" $100 and "buy" $100 with it, nothing has changed. You didn't spend anything hence you didn't incur any additional debt This is incorrect. You’re confusing a neutral net worth with a lack of debt. They’re not equivalent. If you borrow $100 then you have incurred $100 of debt. It doesn’t matter if you still have $100 in your hand, you still have $100 of debt to service. That last part is important: The government would have to service the interest on the money they borrowed. As time went on, the effective size of the debt will grow.