(Kitco News) – Presidential candidate Donald Trump has seen his odds of winning the 2024 Presidential Election surge in the wake of his failed assassination attempt. As analysts start to focus on how his policies could affect the U.S. economy, one rumor bodes extremely well for the cryptocurrency ecosystem: Trump could label Bitcoin (BTC) as a strategic asset at the upcoming Bitcoin 2024 Conference in Nashville.
According to Dennis Porter, co-founder of the non-profit organization Satoshi Act, inside sources have told him that labeling Bitcoin as a reserve asset is on Trump’s to-do list, and the Bitcoin 2024 Conference, scheduled to take place from July 25 - July 27, offers the opportune time to make the announcement.
HUGE BREAKING: Trump to announce a USA #Bitcoin strategic reserve in Nashville ?? - Sources
— Dennis Porter (@Dennis_Porter_) July 18, 2024
“Adding #Bitcoin as a ‘strategic reserve’ to the US Treasury is a no brainer and once the USA does it, the paradigm will shift and the world will understand they must also have a #Bitcoin position,” he said in a follow-up post. “When the USA leads, the world follows.”
“Bitcoin is a borderless, censorship-resistant, decentralized, counter-party free, perfectly finite, digital gold with an immutable ledger and no method for capture,” he added. “Of course governments are going to want some for themselves. It’s an absolute no-brainer.”
Highlighting the fact that the U.S. government currently holds around $5.5 billion worth of Bitcoin that has been seized in various law enforcement operations, Porter said, “The next President of the USA should sign an executive order to convert the $5.5 billion held by the US Government into a strategic reserve at the US Treasury then use that reserve to back the dollar with #Bitcoin.”
The idea of making BTC a reserve asset is not new as multiple Bitcoin-friendly political leaders have previously advocated the move, including Vivek Ramaswamy, a former presidential candidate who has been advising Trump on Bitcoin and digital assets since January.
Ramaswamy proposed backing the U.S. dollar with a basket of commodities, including Bitcoin, to combat inflation and maintain the currency’s value over time.
Independent Presidential candidate Robert F. Kennedy Jr. has also proposed the idea. “My plan would be to start very, very small, perhaps 1% of issued T-bills would be backed by hard currency, by gold, silver platinum or Bitcoin,” Kennedy said during the Heal-the-Divide PAC event in July 2023.
"Backing dollars and U.S. debt obligations with hard assets could help restore strength back to the dollar, rein in inflation, and usher in a new era of American financial stability, peace and prosperity," he added, before announcing that his administration “will exempt the conversion of Bitcoin to the U.S. dollar from capital gains taxes.”
While team Trump has yet to confirm or deny the rumor, Porter remains adamant that the move is being considered, doubling down on his original post with a lengthy X thread.
“Adding #Bitcoin as a strategic reserve would be a decisive win for America and for #Bitcoin, but some wonder ‘how it can be done?’” he said. “The most obvious way forward: Exchange Stabilization Fund (ESF) at the U.S. Treasury.”
“For starters, let’s talk about the Exchange Stabilization Fund (ESF). This fund is a special fund operated by the United States Treasury Department. It was established by the Gold Reserve Act of 1934, with the primary objective of stabilizing the value of the U.S. dollar,” he explained. “The ESF provides the Treasury with a tool to engage in currency and gold operations to influence exchange rates and promote stability in the foreign exchange markets. (Remember #Bitcoin is in essence considered to be a foreign currency).”
Porter said the key functions of the ESF include: “1) Foreign Exchange Intervention: The ESF can buy and sell foreign currencies and gold (#Bitcoin?) to influence the value of the dollar. This is often done in coordination with the Federal Reserve to ensure consistency with broader monetary policy objectives. The interventions can be in the spot market (for immediate delivery) or forward market (for future delivery).”
“2) Stabilizing the Dollar,” he said. “By intervening in foreign exchange markets, the ESF aims to stabilize the value of the dollar against other currencies. This can help prevent or mitigate exchange rate volatility that could negatively impact international trade and financial stability.”
The third function he identified was using the ESF in “Emergency Financial Operations.”
“The ESF can provide emergency financial support in certain situations, such as financial crises or to support specific government financial commitments,” he said.
As for how Bitcoin could be added to the ESF, Porter said, “Integrating #Bitcoin into the ESF would be a novel undertaking, given #Bitcoin's unique architecture compared to traditional currencies and commodities.”
“Here’s how it could potentially be approached,” he wrote. “1) Holding Bitcoin as a Reserve Asset: The ESF could start by holding #Bitcoin as part of its reserve assets, similar to how it holds foreign currencies and gold. This would diversify the assets of the ESF and provide a hedge against inflation and currency devaluation.”
“2) #Bitcoin Interventions: The ESF could use #Bitcoin in its interventions to stabilize the dollar or other currencies,” Porter said. “For example, it could buy or sell #Bitcoin to influence its exchange rate relative to the dollar (they should just HODL though). This would be similar to its current operations with foreign currencies and gold.”
“3) Liquidity Provision: During periods of financial stress, the ESF could provide liquidity in #Bitcoin to markets or institutions in need, helping to stabilize financial conditions and support market confidence,” he said.
The fourth way is through “Policy Coordination: Any move to integrate #Bitcoin into the ESF would require close coordination with financial regulatory bodies to ensure the process is smooth and consistent,” Porter wrote.
He added that a “Bonus executive order” from Trump would be to “End the US Marshall auctions of confiscated #Bitcoin and transfer the $5.5 billion of $BTC into the ESF at Treasury. This may require an executive order. The benefit is the U.S. doesn’t have to buy in the open market.”
“The path forward is clear, but it will take courage,” Porter concluded. “If the USA can be bold and lead the world here, we will have a strategic #Bitcoin advantage that could bolster the US economy and the dollar for decades to come.”
According to Tayler McCracken, Editor-in-Chief at Coin Bureau, it’s not just the U.S. that could turn to Bitcoin as a reserve currency as one day, King Crypto could become a global reserve currency.
“A Bitcoin-based world would indeed reshape our reality, possibly for the better,” he wrote. “Such a system would eliminate inflation, currency manipulation, and government restrictions on bank access, fostering trust among nations and streamlining global payments.”
After laying out various aspects of the discussion in a lengthy post, McCraken said that while the adoption of Bitcoin as a reserve currency will take time to come to fruition, if ever, the declining state of global fiat currencies means that Bitcoin will see a rise in adoption regardless of whether governments formally recognize it as a reserve asset.
“While it's uncertain whether Bitcoin will become the world's reserve currency, it's likely to gain significance alongside traditional currencies,” he said. “As fiat currencies decline, Bitcoin may find a place on central banks' balance sheets in increasing quantities, especially after 2025 when central banks will be allowed to allocate up to 2% of their reserves in Bitcoin, a number that will likely increase with time.”
“Finally, the significant impact of game theory on Bitcoin adoption cannot be overlooked,” he added. “Bitcoin stands as one of the most groundbreaking and influential inventions in history. Its game theory has the potential to drive rapid adoption.”
“Consider the consequences for a nation today if they had chosen to forgo adopting the internet in the 1990s/2000s – they'd be isolated from the global community in almost every aspect,” McCracken said. “Similarly, opting out of Bitcoin adoption could lead to severe disadvantages, a realization gradually dawning on governments worldwide. Bitcoin's global adoption rate surpasses that of the internet's early years, evident in its achievement of a trillion-dollar market cap in just 12 years – an unprecedented feat in asset history.”
“The risk of not adopting Bitcoin is too significant to be overlooked and we are seeing nations waking up to that fact. It’s similar to the Artificial Intelligence adoption trends we are seeing,” he concluded. “The world is becoming a more digital and interconnected place and the importance of remaining technologically competitive is among the highest stakes competitions humanity has ever participated in.”
