Bitcoin Strategic Reserve, a long and challenging road ahead.

Written by: Mu Mu, Plain Language Blockchain

Since the early November confirmation of Trump's victory, the crypto market, especially Bitcoin, has entered a phase of strong expectations for the "U.S. Bitcoin Strategic Reserve." Clearly, the market will focus heavily on the implementation of this commitment after Trump takes office in 2025. Some analysts assert that this will break the Bitcoin bull-bear cycle, meaning that any "interruption" in the future could lead to significant market volatility. What we can do now is to monitor the progress and anticipate possible timelines for implementation, preparing accordingly.

01 Latest Developments

The "Bitcoin Strategic Reserve" has actually been proposed and discussed even before the U.S. presidential election. Senator Cynthia Lummis proposed the "Bitcoin Act of 2024" on July 31, 2024, which suggests purchasing 200,000 Bitcoins annually, reaching a total of 1 million within five years.

Subsequently, during the campaign, Trump promised at a Bitcoin conference that he would become the "crypto president," and the industry hopes he will fulfill this promise by creating a Bitcoin inventory through an executive order, ensuring that the industry can access banking services, and establishing a cryptocurrency committee.

On December 17, 2024, the Bitcoin Policy Institute (BPI) (note, it is a non-official organization, but a nonprofit focused on Bitcoin policy research, and it remains one of the important think tanks for policymakers on Bitcoin-related issues) recently released a draft of an executive order, attempting to provide reference for Trump's "Bitcoin Strategic Reserve" executive order framework. The draft explicitly suggests allocating 1%-5% of Treasury assets for Bitcoin purchases to form a long-term reserve, led by the Treasury Department with cooperation from the Federal Reserve, gradually establishing the reserve, etc.

On December 19, 2024, Federal Reserve Chairman Powell (expected to continue serving after Trump takes office) expressed cautious views at a press conference, stating that the Federal Reserve has no intention of participating in any government accumulation of Bitcoin, as such matters fall under Congress's jurisdiction, and the Federal Reserve is not seeking to change existing laws to allow for Bitcoin holdings.

From the latest situation, despite the conservative stance of the Federal Reserve Chairman, the favorable conditions such as the crypto-friendly U.S. Treasury Secretary nominated by Trump and the swift issuance of a "presidential executive order" after taking office will not hinder Trump's team from continuing to push for the inclusion of Bitcoin in the U.S. strategic reserve plan.

02 Earliest Implementation Timeline

Given that the "Bitcoin Strategic Reserve" is not a trivial matter that can be executed on a whim by the U.S. president, we will not see its implementation immediately. Based on the current administrative or legislative processes in the country, if Trump wants to implement the Bitcoin strategic reserve, he would need to have the cryptocurrency committee conduct policy research and feasibility assessments immediately after taking office, formally propose a plan upon completion, and then proceed through two paths:

Path One: Presidential Executive Order (Earliest in the second half of 2025)

Issuing an executive order directly after taking office is the quickest path, as it can bypass resistance from the Federal Reserve and Congress. This would also reference the draft provided by the "Bitcoin Policy Institute," directing the U.S. Treasury to utilize the Exchange Stabilization Fund (ESF) to directly allocate Bitcoin.

However, while this method is quick and convenient, it has drawbacks. Although the Treasury's Exchange Stabilization Fund does not require Congressional approval, it can be subject to Congressional investigation and legislative restrictions. An executive order can also be overturned or modified by the next president, so its durability and stability are not as strong as legislation.

Path Two: Congressional Legislation (Earliest in the second half of 2026)

If pursued through a more stable legislative path, it would require a longer process. After the cryptocurrency committee conducts policy research and feasibility assessments, the bill would need to be submitted to Congress and reviewed by the Senate Banking Committee, then pass through the Senate, House of Representatives, and receive presidential approval before it can be officially enacted.

This process may involve various back-and-forth negotiations and is relatively complex, as many conservative lawmakers are likely to raise objections and attempt to obstruct it. Thus, while this path can yield a lasting and stable bill, it will take a long time, likely not seeing implementation until the second half of 2026 or 2027.

Recently, there have been reports that the crypto industry is pushing for Trump's team to issue an executive order on his first day in office next month to initiate his promised cryptocurrency policy reforms, helping to promote the mainstreaming of crypto. If this path is taken, we might see the Bitcoin strategic reserve implemented as early as mid-2025.

03 Key Time Points

During the "process" of the relevant executive orders or bills for the Bitcoin strategic reserve, the following key time points may significantly impact the market:

1) January 20, 2025, around Trump's inauguration

Trump will officially take office on this day, and from this point, he can formally begin to "issue orders." This time point will mark the beginning of the new president's administration, and relevant policy directions may gradually emerge. The market will closely watch the inaugural address and the release of early executive orders. This inauguration is expected to be quite lively, with many guests invited by Trump, and the financial markets will pay close attention.

2) Mid-2025, completion of the policy research phase

Based on the timeline, the cryptocurrency committee's policy research is expected to be completed and a feasibility report and draft regarding Bitcoin reserves proposed by mid-2025. Subsequently, Trump could sign an executive order, marking the official introduction of the "Bitcoin Strategic Reserve."

3) Second half of 2025 to early 2026, implementation details and potential Congressional tug-of-war

After signing the relevant executive orders and determining the framework, the U.S. Treasury, Federal Reserve, and other relevant departments will begin to formulate specific implementation details, including Bitcoin procurement methods, reserve ratios, asset management rules, etc., and then begin formal implementation.

During this period, it is unlikely to proceed smoothly, as opposing members of Congress will likely join in to obstruct and create delays.

Finally, if everything goes smoothly and the Bitcoin reserve strategy yields objective "benefits," it may further promote legislation in the future, which would have a profound impact on the crypto market landscape.

04 Summary

The road to the "Bitcoin Strategic Reserve" seems fraught with twists and turns, and it is not something that can be implemented overnight; the earliest it could happen is in six months. However, regardless of the outcome, Trump's "U.S. Bitcoin Strategic Reserve" has created positive expectations and also "set a template" for central banks, financial institutions, and publicly listed companies in various countries to research and explore the feasibility of Bitcoin reserves. Although there may still be many uncertainties regarding policy details and the final implementation timeline, we still need to follow and pay attention to key time points, ready to make adjustments as needed.

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