What the Heck is a Strategic Crypto Reserve?

This is a guest article by Alex Tapscott, Managing Director of?the Ninepoint Digital?Asset?Group, a division of Ninepoint Partners , and Portfolio Manager of the Ninepoint Crypto and AI Leaders ETF at Ninepoint Partners

This article originally appeared in the Digital Asset Digest newsletter by Ninepoint Digital Asset Group. Subscribe to start receiving this newsletter right in your inbox.

Last weekend, President Trump announced the formation of a strategic crypto reserve made up of Bitcoin, Ethereum, Solana, XRP, and Cardano.

While the announcement provided a jolt to markets, that quickly wore off as the administration provided few additional details of how they would fund and manage the reserve.

Bitcoin is well off the lows following the announcement, but it is hard to untangle the different factors that may be contributing to the recent strength – perhaps a softening of tariff rhetoric, which has helped stocks, is also lifting Bitcoin.

Responding to the market’s mixed reaction to the news, Commerce Secretary Howard Lutnick tried to clarify that the crypto reserve is primarily a “strategic Bitcoin reserve,” with other tokens being treated “positively but differently.” This was confirmed last night when Trump signed his Executive Order creating a Bitcoin Reserve. Most people expect him to announce the addition of new names along the lines of what he first shared last weekend. Still, confusion abounds (as is typical with Mr. Trump).

Anyway, what to make of the reserve and is it a good idea? The idea of a strategic reserve for critical assets or commodities is not new. The government maintains strategic stockpiles of gold and petroleum, and governments and central banks maintain large balances of foreign currencies, for example. These are meant to act as a hedge against inflation, a supply buffer in case of crisis or to alleviate price squeezes, and to hedge against currency instability, respectively.

Using that framework, one could argue a strategic Bitcoin reserve makes sense if you believe Bitcoin will continue to mature into an important commodity and monetary asset that might be widely held by governments, central banks and corporations. There is increasingly enough evidence to support that view.

What about these other names like Solana and Ethereum? Those two platforms are used by many American firms including important companies like Visa and Blackrock. Furthermore, the government may become a user of the technology, meaning they may need to hold some ETH or SOL to pay for transactions and contribute to the governance of the network, by voting and staking their tokens. XRP and Cardano likely got the nod because they’re “American-made” projects that have effectively lobbied the Trump administration. Is that enough to justify the inclusion of these four other assets?

One could argue a crypto reserve, while early, helps to future-proof the government and signals to the country they’re a model user of new technology, akin to the Federal Government in the 1990s launching their own webpages to show they were tuned in. I think that’s a generous interpretation.

On the flip side, I think this raises several troubling questions about the true rationale for this. Was the administration doing a solid for crypto businesses and investors who were big donors to the campaign? Is the government implicitly (or explicitly) picking winners by elevating these blockchains at the expense of others? Will the Trump administration use taxpayer money to buy some of these assets, which are still speculative and sometimes volatile? I hope not.

Putting aside these criticisms, this much is obvious: regulatory headwinds are now tailwinds. Confusion around the reserve notwithstanding, this administration has done some things right on the crypto issue:

1. Appointed or nominated pro-crypto people to top government posts, including Treasury Secretary, Commerce Secretary and Chairman of the SEC
2. The SEC dropped several high-profile cases against companies like Coinbase, Robinhood, ConsenSys, OpenSea, Gemini, Kraken, and Yuga Labs
3. Created the position of Crypto and AI Czar in the administration
4. Pro-crypto lawmakers have drafted new laws and regulations that will be on the floor this year
5. Announced the creation of a Strategic Crypto Reserve
6. The Department of Government Efficiency (aka DOGE) has said it wants to use blockchain (crypto's underlying technology) to try and improve efficiency and automate some processes

In my view, this administration should stop squandering political capital on stunts like a crypto reserve and instead work with industry, civil society, regulators and lawmakers to craft the laws and regulations that can put the industry on a firm footing, encourage investment from institutions and enterprises and catalyze more capital formation and entrepreneurship.

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