This morning, the long-awaited executive order on the strategic reserve of Bitcoin finally came. At around 8 a.m. on March 7, David Sacks, director of AI and cryptocurrency at the White House, posted on social media that President Trump had signed an executive order to establish a strategic reserve of Bitcoin a few minutes ago. However, after this great good news came out, the price of Bitcoin suddenly plunged, falling from around $90,000 to below $85,000 within an hour. As of writing, the price of Bitcoin has rebounded to around $88,000.
It is worth noting that the strategic reserve will be capitalized with bitcoin owned by the federal government, that is, bitcoin confiscated by the U.S. government in criminal or civil asset forfeiture proceedings. The U.S. government will not sell any bitcoin deposited in the reserve, but it is also unlikely to purchase more bitcoin. This means it wont cost taxpayers a penny, David Sacks wrote in a tweet.
Hoarding without buying triggers Sell The News
In January, Trump signed an executive order directing his administration to assess the possibility of establishing and maintaining a national digital asset reserve and set up a working group to study the feasibility, chaired by David Sacks. In his report on strategic reserves, 10x Research analyst Marcus pointed out that there is a key difference between reserve and creating and maintaining a national digital asset reserve.
The word reserve indicates an active strategy of acquiring more assets, while build and maintain implies a more passive approach, a strategy of hoarding but not buying. Marcus mentioned in the report that although the executive order targets a wider range of digital assets rather than Bitcoin, it also means that the US government prefers to continue holding existing cryptocurrencies rather than buying more crypto assets.
On the other hand, Trump’s executive order on the strategic reserve of Bitcoin is still far from being approved by Congress, and it will take several months before it is officially passed and takes effect, which further stimulates traders’ Sell The News sentiment and motivation.
The U.S. governments handling of currency, reserves, and financial assets is governed by laws and institutions such as the Treasury Department and the Federal Reserve. Unlike gold or oil, Bitcoin is not a physical asset that the government can store in the traditional sense. It is a decentralized digital currency, so reserves mean that the government needs to store Bitcoin through a series of safe and reliable formal processes, which will further raise questions about funds, security, and other aspects.
However, many practitioners who have close ties to the current pro-crypto government also expressed positive views on the executive order.
David Sacks, the White House AI and cryptocurrency director, posted on social media that the U.S. governments premature sale of Bitcoin has cost U.S. taxpayers more than $17 billion. Now, the federal government will develop a strategy to maximize the value of its Bitcoin holdings. Coinbase director Conor Grogan posted on social media that according to my estimate, the U.S. government holds 198,109 Bitcoins. This executive order will reduce selling pressure by about $18 billion.
It is also worth noting that in addition to the federal governments efforts in Bitcoin strategic reserves, many US states have also responded positively in this regard. So far, 18 US states have considered or proposed legislation to establish state-level strategic Bitcoin reserves. On February 27, the Texas Commerce and Business Committee took the lead in reviewing and passing the Bitcoin Reserve Act and submitted it to the Senate for review.
The bill aims to establish a state-controlled Bitcoin reserve to enhance financial security and promote digital asset innovation. Its main contents include: authorizing the Texas government to hold Bitcoin as a financial asset, the Texas Comptrollers Office is responsible for management, implementing cold storage solutions and conducting regular audits, prohibiting the acquisition of Bitcoin from foreign entities or individuals involved in illegal activities, etc. If passed by a two-thirds majority of the Senate, the bill will take effect immediately, otherwise it will officially take effect on September 1, 2025.
On March 7, the Texas Senate passed the Strategic Bitcoin Reserve Act SB-21 with 25 votes in favor and 5 votes against. After that, SB-21 needs to be submitted to the Texas House of Representatives, where the bill will be assigned to relevant committees for review, revision, and hearings.
If the House makes changes to SB 21, the Senate must agree to those changes, or the two sides will need to work out a final version through a conference committee. The final version that both sides agree on will then need to be voted on separately. After passing the House and Senate, the bill will be sent to the Governor of Texas for his signature. The Governor can choose to sign the bill, making it law.
Soul-searching question: Should the Bitcoin confiscated in the Bitfinex case be returned?
Currently, the U.S. government holds about 200,000 bitcoins, worth about $18 billion at current prices. These bitcoins were seized through various law enforcement actions, with the two main sources being the bitcoins confiscated in the Silk Road case and the bitcoins seized in the 2016 Bitfinex hack.
Related reading: What are the US government Bitcoin addresses ?
In February 2022, the U.S. Department of Justice (DOJ) seized more than 90,000 bitcoins from the Bitfinex hack. The hackers involved, Ilya Lichtenstein and Heather Morgan, were arrested and convicted of money laundering hacking, and Lichtenstein admitted to planning the hacking attack. Since then, the U.S. government has held the seized bitcoins as confiscated assets.
After the signing of the executive order on the strategic reserve of Bitcoin, Should Bitfinexs Bitcoin be returned? became the most concerned issue for many industry participants, because this part of Bitcoin accounts for nearly 50% of the US governments Bitcoin holdings.
The key reason lies in Bitfinex’s post-hacking compensation plan: after the 2016 hack, Bitfinex reduced all customer balances by 36% and issued BFX (LEO) tokens, which were all redeemed within eight months, effectively making customers “whole” in the eyes of the government. Therefore, Bitfinex, the entity that bore the losses, is considered the primary claimant.
In October 2024, the U.S. Attorney’s Office for the District of Columbia filed a motion suggesting that Bitfinex may be the “only victim” eligible for compensation under the Crime Victims Rights Act (CVRA) and the Mandatory Victims Compensation Act (MVRA). This position was reinforced in a January 2025 filing, where the government proposed returning Bitcoin to Bitfinex “in kind” (BTC, not cash).
Related reading: US government says funds from 2016 hack should be returned to Bitfinex
Previously, Bitfinex promised to buy back LEO once it got back the hacked Bitcoin. Many former Bitfinex customers believe that they are entitled to the recovered Bitcoin given the sharp appreciation of Bitcoin since 2016, and claim that the LEO token compensation on the Bitfinex platform does not reflect the future value of BTC.
So after the news broke in October 2024 that the US government applied for an alternative notification procedure to inform potential victims of the 2016 Bitfinex hack, the Bitfinex platform token LEO quickly rose by nearly 40%, indicating the markets high expectations for the US government to return the stolen bitcoins and Bitfinexs travel repurchase plan.
Of course, with the signing of the strategic reserve executive order, the US governments position may change at any time.
What else to expect from the White House Crypto Summit?
In addition, David Sacks mentioned in a tweet this morning that the executive order also established the U.S. Digital Asset Reserve, which is intended to manage government digital assets under the leadership of the Treasury Department.
For David Sacks, the White House Crypto Summit, which he is about to host, is the top priority at the moment. This summit is the first time that the White House has held such an event, and the specifications are very high. According to multiple media reports, the most eye-catching thing about this summit may be the National Crypto Strategic Reserve plan. The plan intends to include mainstream cryptocurrencies such as Bitcoin, Ethereum, Solana, Cardano and Ripple (XRP) into the national reserve system, and its scale and functional positioning are similar to traditional oil reserves. According to Forbes, the selection of reserve assets takes into account the characteristics of each currency: Bitcoins anti-inflation properties as digital gold, Ethereums smart contract ecosystem, Solanas high-performance application platform, Cardanos scientific research-driven security architecture, and Ripples cross-border payment efficiency advantages.
In terms of regulatory system construction, the summit will focus on the top-level design of stablecoins and the overall regulatory framework. Cointelegraph revealed that Trump adviser David Sachs advocated strengthening the dollar hegemony through stablecoins, a view that may affect federal regulatory plans. The draft bill currently being promoted by the House Financial Services Committee shows that stablecoin institutions with an issuance volume of more than 10 billion US dollars may be included in the Federal Reserves regulatory system, forming a two-tier regulatory structure of federal and state governments. At the same time, the 21st Century Financial Innovation and Technology Act proposed in 2023 may usher in substantial progress. Its core lies in coordinating the regulatory powers and responsibilities of the SEC and the CFTC and building a digital asset regulatory paradigm that takes into account both innovation and security.
In order to achieve the strategic goal of becoming the Crypto Capital, the summit may launch a series of innovation incentives and tax-related policies. CryptoBriefing analysis pointed out that the government may relax regulatory restrictions during the Biden era. An unexpected detail is that the summit may also discuss crypto-related tax reforms. According to BeInCrypto, tax reforms may be part of the agenda and may affect investors tax burdens, involving simplifying tax reporting for crypto transactions or providing tax incentives to promote industry growth.
