Trump’s Plan To Stockpile Crypto Complicates Industry's Policy Push

Controversy over President Donald Trump's creation of a "strategic bitcoin reserve" and a “digital asset stockpile” is creating a new potential headache for Republicans who are working to advance a slate of industry-friendly legislation.

Democrats — and even some industry players themselves — are skeptical of Trump’s plan, announced in an executive order late Thursday, to have the federal government create reserves of crypto tokens, saying it could be used to pick winners and losers in the industry. The proposal comes just weeks after Trump and some of his family members launched their own memecoins just prior to his inauguration.

Republicans on Capitol Hill are gearing up to quickly advance long-sought changes that would overhaul how digital assets are regulated and grant the industry a new stamp of legitimacy from Washington. Bipartisan support is needed for any crypto legislation to clear the Senate and become law. And while many Democrats have gotten on board with the pro-crypto push, they say proposals like the crypto reserve are undermining their legislative efforts.

“This is just the wet dreams of the crypto bros, and it’s a bad idea,” Rep. Jim Himes (D-Conn.), a senior Democrat on the House Financial Services Committee who has supported industry-backed crypto legislation, said before Trump signed the executive order setting up the reserve and stockpile. “Trump coins and Melania coins and strategic reserves — that’s just all a distraction that’s going to make it, I think, harder for the Congress to come around on what could be an innovative technology.”

House Financial Services Chair French Hill, whose panel is at the center of digital asset legislation, said he supports Trump’s vision to make the U.S. a leader in the industry, but stopped short of outright endorsing the order.

“As President Trump works to implement this Executive Order, I encourage his administration to collaborate with Congress, particularly in regard to the structure and any funding related to the Strategic Bitcoin Reserve,” the Arkansas Republican said in a statement on Friday.

The announcement of the executive order came ahead of a White House summit set for Friday on crypto policy that will feature a range of the industry’s top executives.

The pushback and caution illustrates how fractures over Trump’s actions from within the crypto industry and among crypto-friendly lawmakers could complicate efforts to enact policies benefiting digital asset firms. It also highlights how Trump’s endorsement of ideas once relegated to the fringes of the crypto community could jeopardize broader efforts by policymakers to legitimize the $3 trillion market.

Earlier this week, when Trump pitched the idea of a reserve that would include a wide array of tokens, the concept was widely criticized in Washington and in the industry — in part over concerns that the federal government was about to become a major player in the crypto market. Ultimately, however, the White House didn’t go that far.

Instead, Trump signed the executive order authorizing the U.S. government to formally stockpile its already-seized bitcoin in the so-called strategic reserve. The White House’s crypto and artificial intelligence czar, David Sacks, equated it to a “digital Fort Knox” as bitcoin — the original crypto token — is often labeled “digital gold.” In addition to the bitcoin reserve, the order sets up a “U.S. Digital Asset Stockpile” that will contain other types of crypto tokens that the government seizes.

No taxpayer dollars will be used to acquire bitcoin for the reserve, according to the White House. The executive order also states that the stockpile will only include assets that are acquired through forfeiture seizures and penalties.

The price of bitcoin plummeted immediately following the announcement, but the stockpile could be a long-term boon for the asset.

“The market was expecting a more aggressive EO,” said Nic Carter, a Trump supporter who is a founding partner at a crypto-focused venture capital firm, Castle Island Ventures. “Long term, I think it’s very, very positive for bitcoin. The U.S. government just ratified it, basically, as a global asset of consequence.”

Carter, who criticized Trump’s initial announcements over the weekend about the crypto stockpile, said the order was “cleverly written.” He said that setting up a “structure for seized bitcoin is fine,” but he is opposed to the government stockpiling non-bitcoin crypto assets and “very against” acquiring bitcoin through any means aside from law enforcement seizure.

A one-time crypto skeptic, Trump eagerly embraced the crypto industry while on the campaign trail last year as firms came under mounting legal pressure from former President Joe Biden’s financial regulators.

His regulators have since begun to pull back from the federal government’s sweeping crackdown of crypto companies, while Trump and the White House have started rolling out various policy proposals like the reserve that stand to be major windfalls for the industry.

But Congress holds the keys to the crypto industry’s biggest lobbying goals — a new, light-touch regulatory framework that divvies up oversight of digital assets between regulators — and bipartisan support is needed to clear the Senate. Many Democrats are supportive of pro-crypto legislation, but they say Trump’s moves on the memecoin and bitcoin reserve are undermining efforts to legislate on the issue.

“There’s a danger that the excesses of the Trump administration could discredit the technology,” said Rep. Ritchie Torres, a pro-crypto New York Democrat who co-leads a new bipartisan congressional digital asset caucus.

Sen. Ruben Gallego of Arizona, the top Democrat on a Senate Banking Committee subpanel on digital assets, said Monday that the move “deteriorates the effort that a lot of us are doing to make cryptocurrency more mainstream, more legitimate and something that people will understand instead of fearing.”

First floated last summer, the reserve was originally pitched by Trump as a stockpile of bitcoin that the federal government has seized over the years. Yet, over the weekend, Trump opened the door for a wider array of tokens to be included — such as ether, Ripple’s XRP and Solana — setting off the wave of industry and lawmaker concern.

“There’s a huge difference of opinion within the industry” about the reserve, said Blockchain Association CEO Kristin Smith, who added that the industry’s policy focus right now lies on legislation for the regulation of so-called stablecoins and a bill to set up how Wall Street regulators police the market.

“The idea of a reserve has been floated many, many times, and I think it’s something that people are open to having a debate about,” Smith said prior to the executive order’s signing. “But in the broader scheme of the whole industry, it’s not the top priority at this time.”

Smith on Friday said the order “further demonstrates President Trump’s commitment to maintaining — and growing — America’s leadership in crypto innovation and financial technology.”

Others still have questions, such as how the bitcoin reserve would go about acquiring further tokens. In the order, the White House said Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick will develop strategies for obtaining more bitcoin “provided that such strategies are budget neutral and do not impose incremental costs on United States taxpayers.” But it’s unclear what exactly that could entail.

Hilary Allen, a law professor at American University who is a staunch crypto critic, said open-market purchases of any token are likely out of the question. That’s because any time the U.S. bought or sold a crypto token, Allen said, it would be available in real time for all to see — meaning that the government could wind up paying higher prices in the process of buying tokens and could risk a major selloff when it cashes out.

“It’s purely supply and demand dictating the value. So, if you have an extremely large bag holder like a crypto reserve start to sell, that would undermine its ability to usefully pay for things,” Allen said, before adding “we don’t put poker chips in reserves.”

Still, some of Trump’s allies have defended the idea. Rep. Byron Donalds (R-Fla.) said the reserve is “great.”

“It’s something we should be looking at,” Donalds said. “We should be looking at holding anything that has a real repository of value — bitcoin, in particular, but there are other coins out there that do have legitimate value.”