Donald Trump has signed an executive order to establish a strategic bitcoin reserve by using billons in crypto confiscated from cyber criminals like Silk Road’s Ross Ulbright and convicted fraudster Sam Bankman-Fried.
Trump made the announcement ahead of a summit with the sector’s top players, completing a complete 180 on an industry he once called ‘a scam.’
The White House confirmed the executive order to DailyMail.com.
White House ‘crypto czar’ David Sacks said the reserve fulfills a campaign promise from Trump.
‘The U.S. will not sell any bitcoin deposited into the Reserve,’ Sacks said on social media. ‘It will be kept as a store of value. The Reserve is like a digital Fort Knox for the cryptocurrency often called “digital gold.”‘
The reserve will be capitalized with bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings, Sacks said.
That could include the $6.5billion in bitcoin from pardoned Silk Road founder Ross Ulbricht, who was sentenced to life in prison for running an underground online marketplace where drug dealers using the currency.
It could also be using the ill-gotten gains of jailed fraudster Sam Bankman-Fried, who was sentenced in March 2024 to 25 years in prison for a massive fraud on hundreds of thousands of customers that unraveled with the collapse of FTX, once one of the world’s most popular platforms for exchanging digital currency.
He said that this will make it so that taxpayer money does not get invested in further crypto purchases which Trump has promised the government will not make.
The United States government is estimated to be in possession of about 200,000 bitcoin though Sacks said there has never been an official audit.
An audit will finally take place under the direction of the executive order.
‘Premature sales of bitcoin have already cost U.S. taxpayers over $17 billion in lost value. Now the federal government will have a strategy to maximize the value of its holdings,’ Sacks added, explaining the benefits.
In addition to not buying any new cryptocurrency, the government will never sell any bitcoin that gets deposited.
Sacks compared it to a ‘digital Fort Knox,’ claiming the United States would be sitting on ‘digital gold.’
Secretary of the Treasury Scott Bessent and Secretary of Commerce Howard Lutnick will be in charge of coming up with manners of procuring new bitcoin.
The announcement marks a complete reversal in Trump’s thinking on the industry which he shared his frustration in 2021 by describing Bitcoin as a “scam” affecting the value of the US dollar.
‘Bitcoin, it just seems like a scam,’ Trump said in June of that year. ‘I don’t like it because it’s another currency competing against the dollar’ while adding that he wanted the dollar to be ‘the currency of the world.’
On Friday, Sacks will convene prominent founders, CEOs, and investors with members of a Trump working group to craft policies aimed at accelerating crypto growth and providing the legitimacy the industry has long wanted.
Guests will include twins Cameron and Tyler Winklevoss, founders of platform Gemini, with reports that Brad Armstrong of Coinbase and Michael Saylor, the boss of major bitcoin investor MicroStrategy, will also be in attendance.
Trump’s moves to support the crypto industry, which spent millions backing him and other Republicans in the November elections, have drawn concern from some conservatives and crypto backers over giveaways to an already wealthy community and delegitimizing the digital currency industry.
Proponents argue that a reserve would help taxpayers benefit from crypto’s price growth. The president’s support for the crypto industry has also sparked conflict-of-interest concerns.
Trump’s family has launched cryptocurrency meme coins, and the president also holds a stake in World Liberty Financial, a crypto platform.
His aides have said Trump has handed over control of his business ventures, which are being reviewed by outside ethics lawyers.
On Sunday, Trump said in a post to Truth Social that his January executive order on digital assets would now create a stockpile of currencies including bitcoin, ether, XRP, solana and cardano. The names had not previously been announced.
More than an hour later, Trump added: ‘And, obviously, BTC and ETH, as other valuable Cryptocurrencies, will be at the heart of the Reserve.’
The mere mention of a federal-backed crypto reserve sent the crypto market surging about 10% adding $329 billion to crypto’s market capitalization within hours.
Bitcoin, the world’s largest cryptocurrency by market value, was up more than 9% at $92,700 on Sunday night.
Ether, the second-largest cryptocurrency, was up about 9% at $2,400.
‘This move signals a shift toward active participation in the crypto economy by the U.S. government,’ said Federico Brokate, head of U.S. business at 21Shares, a digital assets investment management firm.
‘It has the potential to accelerate institutional adoption, provide greater regulatory clarity, and strengthen the US’s leadership in digital asset innovation.’
James Butterfill, head of research at asset manager CoinShares, said he was surprised to see digital assets other than bitcoin included in the reserve.
‘Unlike bitcoin…these assets are more akin to tech investments,’ Butterfill said.
‘The announcement suggests a more patriotic stance toward the broader crypto technology space, with little regard for the fundamental qualities of these assets.’
Trump’s announcement is more than just another policy shift and in fact a complete reversal of the federal government’s stance on digital assets.
Trump won support from the crypto industry in his 2024 election bid, and he has quickly moved to back their policy priorities.
He is hosting the first White House Crypto Summit on Friday, and his family has also launched its own coins.
Under his Democratic predecessor, Joe Biden, regulators cracked down on the industry in a bid to protect Americans from fraud and money laundering.
Under Trump, the Securities and Exchange Commission has withdrawn investigations into several crypto companies and dropped a lawsuit against Coinbase, the largest crypto exchange in the U.S.
But in recent weeks cryptocurrency prices are down sharply, with some of the biggest digital currencies erasing nearly all of the gains made after Trump’s election win triggered a wave of excitement across the industry.
Analysts say the market needs a reason to move higher, such as signs that the U.S. Federal Reserve plans to cut interest rates or a clear pro-crypto regulatory framework from the Trump administration.
Geoff Kendrick, an analyst at Standard Chartered, is targeting bitcoin to hit $500,000, against a record high of $109,071, before Trump leaves office.
Regulatory filings in the US showed that while hedge funds remain the dominant crypto buyers, banks and sovereign wealth funds are buying too.
Quarterly filings showed that asset managers boosted allocations to US ETFs tied to the price of spot bitcoin in the fourth quarter of 2024.
Analysts and legal experts are divided on whether an act of Congress will be necessary to set up the reserve.
Some have argued the reserve could be created via the US Treasury’s Exchange Stabilization Fund, which can be used to purchase or sell foreign currencies.
Trump’s crypto group had planned to look at potentially creating the stockpile with cryptocurrencies seized in law enforcement actions.
The Crypto Strategic Reserve remains in its early stages with a Presidential Working Group tasked with its development but the market response suggests that investors already believe it’s a done deal.