Following US President Donald Trump’s announcement of a Crypto Strategic Reserve, industry figures have raised concerns regarding its feasibility and the implications for the market. The news has stirred a mix of optimism and skepticism among market watchers, prompting discussions about the longevity of the recovery attributed to Trump’s influence.
Arthur Hayes Voices Concern Over Crypto Reserve
BitMEX founder Arthur Hayes expressed skepticism regarding the US President’s initiative on his social media platform. In a post on X, he referred to the announcement as merely “just words” and questioned how such a reserve could be established without the approval of Congress. Hayes pointed out that the viability of the reserve hinges on the government’s ability to secure funding through legislative approval, emphasizing that without this, the feasibility of purchasing Bitcoin and other cryptocurrencies is severely compromised.
In his statement, Hayes remarked, “the government will need to get congressional approval to borrow money and/or revalue the gold price higher. Without that, they have no money to buy #bitcoin and #shitcoins.” This highlights a significant hurdle that any proposed reserve will face in the political landscape.
On Sunday, President Trump announced the establishment of the “US Crypto Reserve,” which aims to revive the critical digital currency industry after what he described as years of corruption under the Biden Administration. This announcement follows his earlier executive order aimed at strengthening leadership in digital financial technology, which tasked the Presidential Working Group on Digital Assets with exploring the feasibility of a potential crypto reserve.
On Truth Social, Trump elaborated on the reserve, stating that it would include prominent cryptocurrencies developed in the US, such as Solana (SOL), Cardano (ADA), and XRP, along with Bitcoin (BTC) and Ethereum (ETH) playing central roles in this strategic initiative.
David Sacks, White House AI and Crypto Czar, supported the announcement, indicating that it aligned with Trump’s initial executive order. He further emphasized that this move is a step toward realizing Trump’s ambition to position the U.S. as the “Crypto Capital of the World,” with promises of more details to be shared at the upcoming White House Crypto Summit.
Skepticism Surrounds Funding and Legislative Approval
Ben Zhou, CEO of Bybit, echoed Hayes’ doubts, further complicating the narrative surrounding the proposed reserve. Analysts have pointed out the challenges of funding a US digital asset reserve, emphasizing that any legislative process would be lengthy and complex.
Ali Martinez, a market analyst, stressed that the realization of the strategic reserve is not imminent as it requires comprehensive legislation which involves considerable deliberation. He pointed out that, aside from legislative hurdles, pertinent authorities such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) need to establish a compliance framework.
Martinez raised concerns about potential legislative failures, pondering the implications for market volatility. The fear is that if Congress does not approve the necessary legislation, it could not only stall the proposed reserve but also undo the recent rally seen in the market.
Analyst Tony Sycamore weighed in, acknowledging the price surge resulting from the announcement but warning that funding any digital asset purchases may raise taxpayer concerns, particularly given the government’s considerable national debt. He also suggested that some funding could come from the crypto assets seized during law enforcement actions, including the 144,000 Bitcoin confiscated from Silk Road in 2013. However, Sycamore maintained that utilizing these seized assets for a strategic reserve might not convey bullish sentiment, as it merely represents a transfer of existing assets.
Despite the skepticism, some community proponents argue that Trump’s declaration signifies a broader shift, indicating that the U.S. is heralding the onset of a global “crypto arms race” with Bitcoin and Ethereum at its forefront.
