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Representation of the $Trump meme coin together with Bitcoin and crypto coins, seen in this photo illustration.
Viewpoint: How would Trump’s crypto reserve work?
Though once a crypto skeptic, President Donald Trump has become an enthusiastic supporter of the industry. His media company began investing in crypto several years ago, and on the campaign trail, he pledged to reverse Joe Biden’s administration's tough regulatory approach toward this asset class. He also proposed creating a national Bitcoin stockpile, which would include the Bitcoin seized in law enforcement actions.
Trump’s recent announcement of a “strategic crypto reserve” showed his continued commitment to this idea, as well as his indifference to perceptions of conflicts of interest. Crypto-friendly investors are influential in the new administration, and Trump himself launched a crypto meme coin shortly before taking office.
We asked Eurasia Group expert Babak Minovi how a “strategic crypto reserve” would work.
What do you think the reserve’s purpose would be?
The name implies it would be similar to the Strategic Petroleum Reserve, the 400 million barrels of crude oil the US holds in reserve to supply the country in the event of a disruption. This reserve has also been occasionally used to smooth out the price of oil, most recently with sales in 2020 and 2021 to help moderate post-pandemic price increases. Yet is unclear that crypto is a similarly strategic asset for the US.
Countries also hold other types of assets – usually gold and so-called hard currencies (currencies such as the US dollar that serve as a stable store of value) – for use during times of economic or financial crisis. The US dollar’s status as a global reserve currency allows the US to hold much smaller foreign exchange reserves than the size of its economy would indicate. The US currently has about $1 trillion in reserves, including about $750 billion in gold. In comparison, China has reserves of about $3.2 trillion.
Although speculative assets such as stocks or crypto are generally not included in reserves, allocating some of the US’s reserves to crypto could also be a policy objective of the administration.
What would the reserve mean for the crypto industry?
Given that crypto trading volumes have been around $0.5 trillion a day, it is highly unlikely that any reserve buying envisioned under existing norms would be of sufficient magnitude to affect crypto prices. However, the US Treasury's stamp of approval on crypto as a reserve asset would probably affect market sentiment positively, especially in the short term, by convincing more conservative investors to allocate to the asset class.
There is also the possibility that the US's entry into the crypto reserve bloc could encourage other countries to add crypto assets to their government coffers. El Salvador is another country that has allocated some of its reserves to crypto (though the practice has prompted stern warnings from the International Monetary Fund).
Do you think this is a feasible proposal that is likely to go ahead?
It's hard to say that anything is not feasible these days, given some of the administration’s unexpected early actions, but the wisdom of such a move is questionable. The current downward trend in crypto prices is not outside of historical norms, and its value could sink much more. The relative opacity of the crypto market could also leave these assets more vulnerable to bad actor manipulation, potentially causing ripple effects in financial markets.
Why do you think Trump is advancing this idea and is so bullish on crypto generally?
Though Trump was once dismissive of crypto – he said in 2019 that Bitcoin “was based on thin air” – he later shifted his stance. His deregulatory instincts probably played a role in this shift, as did the influence of people in his orbit. Close advisers such as Elon Musk, Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent – plus some family members – are crypto bulls. Trump’s media company has been dabbling in crypto investments for some time, and his recent experience with the $TRUMP meme coin probably reinforced the idea of crypto’s money-making potential in the president’s mind.
The Biden administration, conversely, took a tough regulatory stance toward crypto – why do you think that is?
In a way, regulators’ concerns with crypto mirror those about any other tradeable asset. Regulators need to be able to establish ownership and price and make sure that investors aren’t swindled by false claims and fraud. The existing regulatory systems have been put in place to ensure the strength and stability of the system for stocks, bonds, foreign exchange, and commodities. A desire to extend that umbrella to crypto – a relatively new asset class – explains most of the tough stance of the previous administration.
Edited by Jonathan House, senior editor at Eurasia Group.
Bitcoins are being displayed in Huai 'an city, Jiangsu province, China, on June 26, 2024.
Hard Numbers: Wisconsin school shooting, Crypto keeps cooking, what Russia got out of A$$ad, Japan’s biggest bank makes huge apology, Brazil tracks DNA of gold
2: Police have identified that the shooter who opened fire at a Christian school in Wisconsin was a 15-year old female student. The shooter killed two people, a student and a teacher, and left six others severely injured before taking her own life.
106,000: Whether you see them as heroes or as villains, one thing is for sure: the crypto bros are absolutely cooking these days. The value of Bitcoin, the world’s largest crypto currency, has tripled in value this year, hitting a record high of $106,000 on Monday before settling back to a still-scorching $105,000. Investors in the currency are eagerly awaiting a crypto-friendly Trump administration. Last week Trump proposed creating a strategic stockpile of Bitcoin, akin to the US strategic oil reserves.
250 million: What did the Kremlin get out of supporting the now-deposed Syrian despot Bashar Assad for so long? At least $250 million, for one thing. According to a phenomenally detailed report by the Financial Times, Assad, under severe US and EU sanctions, airlifted two tons of cash in that amount to Moscow in 2018 and 2019, as part of a broader scheme of embedding Syrian interests in Russia’s financial system.
1 billion: Japan’s biggest bank on Monday apologized after one of its employees allegedly stole more than 1 billion yen (about $6.6 million) from clients’ safety deposit boxes. The thefts occurred over the past four years at two Tokyo branches of Mitsubishi UFJ Financial Group, known as MUFG for short. Gomenasai indeed.
38: Call it the 23 and Me of Brazilian gold.Brazil, which has long struggled to rein in illegal mining in the Amazon, has developed a database that classifies samples of the metal from different regions, based on “radio-isotope scans and fluorescence spectroscopy” (we can’t tell you what that is but it sounds cool). This database of gold’s “DNA” has helped the authorities to better trace illegal gold hauls, boosting seizures of illegal gold by 38% in 2023 alone.Police officers stand guard on the rooftop of Vienna's OPEC headquarters before the start of meeting of OPEC oil.
Hard Numbers: OPEC+ ain’t eager to pump, Mexico woos Trump with drug bust, Bitcoin to the moon, Merkel’s book is a blockbuster, Quake hits the Golden State
1,100: Mexican authorities in the northern state of Sinaloa seized over 1,100 kilograms of fentanyl late on Tuesday in the largest drug bust of its kind in the country’s history. Taking deadly drugs off the street is always a good thing, but critics of the Mexican government say authorities are strategically timing major busts to curry favor with the incoming US administration.
103,000: The price of the cryptocurrency token Bitcoin reached $103,000 on Thursday, breaking its previous record as speculators bet big on a friendly regulatory environment. President-elect Donald Trump appointed Paul Atkins, a crypto promoter, to the Securities and Exchange Commission, prompting the market run.
200,000: Former German Chancellor Angela Merkel’s new book, “Freedom: Memoirs 1954-2021,” is set to become Germany’s bestselling book this year, with 200,000 copies already sold in the week after release. At over 700 pages, you’d expect a juicy nugget or two, but early reviews expressed disappointment that Merkel doesn’t spill much tea on other world leaders and historic events — or reflect on the legacy of some controversial policies, such as welcoming large numbers of refugees and pursuing closer ties with Russia and China.
7.0: A magnitude 7.0 earthquake struck off the coast of Northern California on Thursday morning, triggering evacuation warnings along coastal areas from San Francisco all the way to southern Oregon. Fortunately, a tsunami did not develop, and minimal damage took place from the shaking.
FILE PHOTO: In the photos taken on January 31, 2024, Ukrainian soldiers are deployed in the middle of the conflict with Russia. Ukrainian Intelligence has stated that Russian forces "have already made use" of some missiles delivered to the country by North Korea as part of the invasion and has stressed that there is "cooperation between the two regimes" at a military and weapons.
Hard Numbers: North Koreans killed in Russia, Ireland approaches crucial vote, Pakistan locks down over Khan, Bitcoin to the moon!
500: Ukrainian media reported Sunday that a strike on North Korean forces operating in the Kursk region of Russia killed at least 500 troops, though Pyongyang has not (and probably won’t) confirm the figures. If true, it would be the first major casualty incident for the Korean People’s Army while fighting Ukraine, and the sheer number of deaths at once may be difficult for Pyongyang to explain at home.
20: The left-leaning Irish nationalist party Sinn Fein is polling at 20% ahead of elections on the Emerald Isle on Friday, neck-and-neck with the ruling Fine Gael party at 22%. Sinn Fein looks likely to be able to block Fine Gael and its coalition partner from forming a majority government, but it would need to majorly outperform polling to take charge of the government itself as other parties have sworn not to cooperate.
150: Pakistan’s government on Sunday blocked expressways leading into the capital, Islamabad, shut down cell phone and internet service, and placed shipping containers across major thoroughfares amid mass protests calling for the release of former Prime Minister Imran Khan. The ex-cricket-star-turned-politician is facing 150 criminal charges (all of which he denies) and has been serving a three-year prison sentence since last year.
100,000: The cryptocurrency known as Bitcoin reached a value of $100,000 per token on Friday, a record high fueled by the expectation of a friendlier environment for crypto under the incoming Trump administration. Ten years ago, it was trading for about $350.Displaced Palestinians walk in a tent camp amid the conflict between Israel and Hamas in Khan Younis, southern Gaza Strip, on Nov. 9, 2024.
Hard Numbers: Israel expands humanitarian zone, Bitcoin bounces, Italy’s Meloni loses in court, OECD prices remain high, A very late book return
84,653: The price of bitcoin hit a record high of $84,653 on Monday afternoon on hopes that President-elect Donald Trump will offer cryptocurrency-friendly policies. A year ago, bitcoin sold for about $37,000.
7: An immigration court in Italy has rejected Prime Minister Giorgia Meloni’s bid to detain Europe-bound asylum-seekers in Albania. The judge ruled that seven Bangladeshi and Egyptian men brought to Albania by an Italian warship must be taken to Italy and remain there as they await a decision on their asylum application.
30: Though the inflation rate has cooled across wealthy countries, average price levels across the OECD remained about 30% higher in September 2024 than in December 2019, before COVID and Russia’s invasion of Ukraine sent inflation surging.
51: A book called “The Early Work of Aubrey Beardsley” was returned to a public library in Massachusetts last week. The book was due for return on May 22, 1973, making it 51 years late. President-elect Donald Trump has vowed that China’s government will pay the fine. (Just kidding.) The Worcester Public Library does not charge late fees.El Salvador's President Nayib Bukele, who is running for reelection, greets people, on the day of the presidential and parliamentary elections in San Salvador, El Salvador, February 4, 2024.
Crime fighter cruises to victory in El Salvador
Salvadorans voted overwhelmingly on Sunday to reelect President Nayib Bukele, the self-styled “world’s coolest dictator” – even though the constitution says he can’t serve a second term. Provisional results show he won 83% of the vote.
Bukele came to power five years ago promising to clean up rampant crime and corruption that had turned El Salvador into a lawless state. Today, 75,000 people, or 1.7% of the country’s adult population, are in jail, which is the highest incarceration rate in the world.
Despite criticism for his authoritarian methods, and accusations that his government colludes with the very gangs he vowed to stamp out, Bukele remains wildly popular. Pre-election polls had his main rivals receiving barely 12% of the vote between them.
Bukele's second term faces challenges, however, as poverty remains high and the IMF describes the country’s fiscal situation as "fragile." Since 2019, extreme poverty has doubled and almost half the population is food insecure. Bukele’s economic reforms have been unorthodox: In 2021, the government declared Bitcoin legal tender, attracting attention but also criticism for its volatility. Today, Bukele says El Salvador’s investments in the cryptocurrency are in the black, but it remains to be seen if he has as much success tackling poverty as he did crime.
Former Pakistan Prime Minister Imran Khan speaks to Reuters during an interview in Lahore, Pakistan, in March 2023.
Hard Numbers: Imran Khan faces new sentence, Russia gets economic upgrade, Philippines and Vietnam join hands in South China Sea, Germany makes big Bitcoin seizure
10: Pakistan’s former Prime Minister Imran Khan and former Foreign Minister Shah Mahmood Qureshi were sentenced Tuesday to 10 years in prison for leaking state secrets. While Khan is already serving a three-year term on corruption charges, this is Qureshi’s first conviction. The new ruling comes just a week before general elections on Feb. 8. Khan’s political party, Pakistan Tehreek-e-Insaf, called it “a sham case” and plans to challenge the decision in a higher court.
2.6: Is President Vladimir Putin’s military spending spree paying off? Russia’s GDP is expected to grow 2.6% in 2024, according to the International Monetary Fund, which is 1.5 percentage points higher than its October forecast. For 2025, the IMF sees GDP growth for Russia easing to just 1.1%.
2: Philippine President Ferdinand Marcos Jr. signed two memorandums of understanding with Vietnam on Tuesday to boost cooperation on maritime security in the South China Sea. Vietnam also agreed to a five-year trade deal to supply up to two million tons of white rice to Manila. China, which is less than thrilled by such agreements between its neighbors, launched military drills in the disputed waters earlier this month as the US and Philippines initiated their exercises in the region.
50,000: German authorities on Tuesday seized 50,000 Bitcoins worth nearly $2.17 billion in Saxony. While no charges have been filed yet, police suspect that two men who purchased the cryptocurrency did so with profits from a piracy website. Police are investigating unauthorized commercial exploitation of copyrighted works and money laundering.
Illustration cryptocurrency bitcoin, Suqian, Jiangsu province, China, January 3, 2024.
US regulators give a huge kiss to crypto
The past year and a half has been brutal for cryptocurrencies, as a barrage of bad news, scandals, and bankruptcies fanned suspicions about the credibility of digital coin.
But US federal regulators on Wednesday gave the industry a huge boost of confidence by authorizing some of the world’s largest financial firms to begin offering Exchange Traded Funds (known as ETFs) linked to Bitcoin, the most prevalent crypto currency.
ETFs will enable investors to park their money in funds that contain Bitcoin, rather than investing in the currency itself — this offers a buffer against the volatility associated with buying and selling Bitcoin directly.
Supporters say it’s a huge step towards normalizing cryptocurrencies and opening them up to a wider pool of less risk-tolerant investors. Critics say the move will end in tears as crypto-risks are transfused into the traditional financial sector’s bloodstream.
One person who’s happy about the news? El Salvador’s president Nayib Bukele, who made Bitcoin legal tender three years ago. Anticipation of the ETF decision has pulled his country’s bet on the currency nearly $13 million back into the black in the past few days. Whether that will help to dispel wider questions about the wisdom of his move remains to be seen, but when you’re up you’re up – and right now he’s up.