‘A Pig in Lipstick’: Trump’s Strategic Bitcoin Reserve Faces Backlash
Criticism Mounts Over Trump's Move to Establish a Government Crypto Reserve
President Donald Trump’s decision to establish official government cryptocurrency reserves has sparked criticism from industry experts.
Trump recently signed an executive order creating what he calls a Strategic Bitcoin Reserve, along with a Digital Asset Stockpile consisting of various digital currencies. The reserves will be funded with cryptocurrencies forfeited to the federal government through criminal or civil proceedings.
White House AI and crypto adviser David Sacks compared the initiative to a "digital Fort Knox", referencing the Kentucky military base that houses a significant portion of the U.S. gold reserves.
However, the plan has drawn mixed reactions from the crypto community. Some argue that it lacks transparency, while others believe it doesn’t go far enough in actively supporting cryptocurrency adoption.
Sacks has ordered a full audit of the federal government’s existing crypto holdings, which he estimates at 200,000 Bitcoin, valued at $17.5 billion (£13.6bn) at today’s prices.
"A Pig in Lipstick" – Skepticism from Industry Leaders
Despite the announcement, Charles Edwards, founder of the Capriole Fund, dismissed the initiative as "a pig in lipstick." Responding to Sacks' post on X (formerly Twitter), Edwards pointed out that the reserve does not involve active Bitcoin purchases.
"No active buying means this is just a fancy title for Bitcoin holdings that already existed with the government," he said.
Trump’s executive order states that the Treasury and Commerce Departments will develop strategies for acquiring additional government-held Bitcoin, provided that these purchases are “budget-neutral” and do not impose additional costs on taxpayers.
However, some industry figures believe the move sets a dangerous precedent. Jason Yanowitz, co-founder of Blockworks, criticized the plan, saying it "made no sense" and could distort markets and erode public trust if the government arbitrarily selects which cryptocurrencies to stockpile.
Some Analysts See Merit in the Strategy
Not all reactions have been negative. Investment expert Russ Mould, director at AJ Bell, argued that accumulating crypto assets without actively purchasing them is a sound strategy.
"It would surely be bizarre for the U.S. to sell dollars to buy crypto when the dollar itself is the world's reserve currency and a key source of economic influence," Mould said.
Impact on the Market and Potential Legal Hurdles
While the full implications of Trump’s executive order remain unclear, further details are expected during the first-ever White House Crypto Summit on Friday.
One major point of contention is whether the reserve will face legal challenges or require congressional approval. Sacks has stated that the U.S. will not sell any Bitcoin deposited in the reserve and will maintain it as an asset, though the broader economic benefits remain uncertain.
He reassured the public that the initiative "will not cost taxpayers a dime."
Despite this, the announcement had an immediate market impact. Bitcoin prices dropped by over 5%, seemingly in response to the revelation that the U.S. government would not be actively purchasing the cryptocurrency.
Trump Names Five Cryptos for Reserve – Prices Surge
Earlier this week, Trump publicly named five cryptocurrencies he wanted included in the reserve:
- Bitcoin (BTC)
- Ethereum (ETH)
- XRP
- Solana (SOL)
- Cardano (ADA)
Following the announcement, the market prices of all five assets jumped sharply, fueling further debate over whether the government should be influencing the crypto market.
Yanowitz warned that government involvement in crypto selection could lead to favoritism and manipulation. He emphasized the importance of transparent auditing and public reporting to maintain fairness in the industry.
Trump has actively courted the crypto community, marking a stark contrast to former President Joe Biden, who led a regulatory crackdown on digital assets.
As the White House prepares to host its first Crypto Summit, many are waiting to see whether this initiative will mark a new era of government involvement in digital assets or simply be a symbolic gesture.
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