Original: The Blueprint For A National Bitcoin Reserve (Duanemorris)
Author: Stefanie Wayco, Matthew Catani
Translated by: Bai Hua Blockchain
Table of Contents
1. Trump Administration's Policies
1) The Trump Administration is Moving Towards Crypto-Friendly Policies
U.S. President Donald Trump is gradually pushing for a government that supports Cryptocurrencies. One clear signal is his appointment of David Sacks as the White House's AI and Cryptocurrency Advisor.
This appointment has sparked widespread speculation: How exactly will the "Cryptocurrency Advisor" function? Does this position have real policymaking power? Will it drive a clearer regulatory framework? Is Sacks merely an advisor without an official government role and authority? Could this role lead to the establishment of a new national-level crypto asset reserve mechanism, where the government holds and protects digital assets?
2）National Cryptocurrency Reserves: Promoting the Integration of Regulation and Blockchain Technology
If the United States supports the establishment of an official cryptocurrency reserve, this could bring much-needed policy clarity to the current digital asset landscape, such as clarifying which government agency will regulate cryptocurrencies. This would not only help facilitate the comprehensive integration of cryptocurrencies into daily payments and investments, but also promote the application of blockchain technology in large-scale government projects.
As the most widely recognized digital asset, Bit has long been seen as the industry standard, and Trump has also publicly supported the call to establish a strategic Bit reserve.
Under new government leadership, the United States has an opportunity to lead a wave of innovative transformation, ushering in a new era centered on digital credit and global acceptance - not limited to Bit, but encompassing the entire cryptocurrency ecosystem, whether they are defined as securities or commodities.
2、Digital Asset Diplomacy: How the Federal Reserve Can Utilize Cryptocurrencies
1）The Role of the Federal Reserve
As the central bank of the United States, the Federal Reserve is responsible for managing monetary policy, controlling inflation, regulating financial institutions, ensuring the efficient operation of the payment system, and protecting consumer rights.
The core feature of the Federal Reserve is its political independence, which allows it to focus on long-term economic stability. At the same time, it needs to work closely with other federal agencies, such as the U.S. Department of the Treasury, the U.S. Securities and Exchange Commission (SEC), and the Federal Deposit Insurance Corporation (FDIC), to provide comprehensive regulation and financial stability.
For example, the Federal Reserve collaborates with the Treasury Department to manage government debt issuance and bond market liquidity, works with the SEC to maintain the stability of financial markets, and cooperates with the FDIC to ensure deposit safety and the integrity of the banking system.
To achieve these goals, the Federal Reserve uses various policy tools, including adjusting interest rates to influence borrowing costs, buying and selling U.S. Treasuries through open market operations to control market liquidity, and setting reserve requirements to ensure banks maintain sufficient liquidity.
Furthermore, the Federal Reserve is responsible for regulating the core components of the national payment and settlement system, including electronic payment processing and currency supply management. In the future, it remains to be seen whether the Federal Reserve will further venture into the cryptocurrency realm and become part of U.S. financial policy.
2）The Vision of Cryptocurrency Reserves
Trump's proposed cryptocurrency reserve plan - whether to enhance financial stability, curb inflation, manage national debt, or drive innovation - requires strategic collaboration, and the Federal Reserve is undoubtedly the most suitable institution to lead this process.
Just as in its role in traditional asset management, if the Federal Reserve can participate in the management of cryptocurrency reserves, it not only can ensure that the plan aligns with overall fiscal and monetary policy goals, but also can directly influence its success or failure.
Furthermore, the new administration's acceptance of cryptocurrencies also reflects its confidence in the Federal Reserve's ability to effectively manage cryptocurrency reserves.
National-level cryptocurrency reserves can be viewed as a strategic financial tool similar to traditional reserve assets like gold. Supporters believe that establishing cryptocurrency reserves can help reduce national debt, release more U.S. dollar liquidity, and establish cryptocurrencies as long-term financial assets.
Regardless of whether crypto assets are classified as securities, commodities, or currencies, such a reserve mechanism could become a stabilizing factor in the market and enhance the credibility and legitimacy of cryptocurrencies, elevating their status within the financial system.
3、Cryptocurrencies: New Commodities and the "Digital Gold" Standard
1）Historical Context and Standards of the Financial System
Financial standards play a crucial role in economic stability and consumer trust. Historically, the gold standard provided a fixed monetary value framework, anchoring the value of national currencies to a specific amount of gold.
Under the gold standard system, currencies could be exchanged for gold at a fixed rate, providing stability and predictability for financial markets and international trade. Central banks maintained fiscal discipline by limiting the money supply to match the size of their gold reserves.
Today, the U.S. government uses the "full faith and credit" system to guarantee various securities, ensuring the reliability of assets even without physical backing. This principle refers to the government's unconditional guarantee to fulfill its debt obligations, thereby enhancing market confidence in government-issued securities.
For investors, government credit guarantees make investment tools like U.S. Treasuries more secure and reliable, as these debts are backed by the government's taxing power or money-issuing capacity, providing a stable credit system for the market.
From a policy perspective, the full faith and credit system allows the government to efficiently raise funds through debt financing to support critical national projects such as infrastructure development and emergency relief programs. It also serves as the foundation for broader financial system trust, underpinning policies that promote economic growth and resilience.
If cryptocurrencies can gain more formal recognition within this framework, they may become a new strategic reserve asset after gold and government bonds, potentially ushering in a "digital gold" era for the global financial system.
2）Cryptocurrency Plans: Towards a Clear Regulatory Framework
Wyoming Senator Cynthia Lummis has been advocating for the establishment of a national Bit reserve, with her plan envisioning the accumulation of 1 million Bits over 20 years to hedge against inflation and serve as a supplementary asset to the U.S. dollar.
The proposal includes converting the Federal Reserve's gold certificates to Bit and setting up a strategic reserve that must be held for at least 20 years.
The future cryptocurrency regulatory framework must address the following key issues:
Here is the English translation:- Property Rights and Ownership Protection
- Secure Custody Solutions
- Which institution regulates cryptocurrencies
- When and how, based on the 1946 U.S. Supreme Court case SEC v. Howey, they are determined to be securities, and whether they should be classified as commodities
The Cryptocurrency Regulatory Act proposed by Lummis aims to address these regulatory challenges and clearly distinguish securities from commodities to simplify the compliance process for cryptocurrency companies. The bill also designs specific funding support mechanisms and regulatory frameworks, planning to transfer the regulatory authority of some crypto assets from the U.S. Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC).
With the rapid development of the cryptocurrency market, courts face challenges in determining whether certain digital assets are securities or commodities. The current legal standards still have many ambiguous areas, and the industry finds it difficult to follow a unified regulatory standard. Therefore, a clearer and more comprehensive regulatory framework is crucial.
The Howey test still applies, but this law established in 1946 can no longer fully apply to cryptocurrencies, after all, the courts at the time could not have foreseen the emergence of digital assets.
Although digital assets themselves are not equivalent to securities, if the new administration fully promotes the development of the cryptocurrency industry and embraces cryptocurrency reserves, then establishing a new regulatory framework to clarify the boundaries between securities and commodities may become a reality.
Clearer legal standards and regulatory frameworks will help companies better operate cryptocurrency trading platforms, make it easier for institutional investors to participate in the market, allow consumers to buy, sell and use digital assets without worry, and continuously enhance market confidence and trust in cryptocurrencies.
3) Strategic Petroleum Reserve Model: Lessons for Cryptocurrency Reserves
The U.S. Department of Energy (DOE), through managing the Strategic Petroleum Reserve (SPR), has demonstrated how the government's maintenance of commodity reserves can impact the market and policies.
Although the Strategic Petroleum Reserve is primarily aimed at the energy industry and indirectly affects a wide range of consumers, which is different from the cryptocurrency industry, it still can serve as a basic model for establishing cryptocurrency reserves.
The core functions of the Strategic Petroleum Reserve include:
- Stabilizing oil prices to prevent market volatility
- Offsetting fiscal deficits, providing financial leverage for the government
- Enhancing global market influence, providing strategic advantages in international energy competition
Similar to the role of the SPR in energy markets and inflation control, cryptocurrency reserves can also influence digital asset markets and even become monetary policy tools.
In the management mechanism of the SPR, the DOE is responsible for daily operations, but the President has the authority to order the use of the reserves, and Congress can also authorize the sale of SPR crude oil to support government spending or respond to emergencies, such as the legislatively required periodic sales to adjust the reserve level.
Therefore, the Strategic Petroleum Reserve not only affects financial and monetary policies, but also has a direct impact on the energy market, commodity prices, and inflation expectations.
Similarly, cryptocurrency reserves can:
- Stabilize the cryptocurrency market and reduce price volatility
- Hedge economic instability, providing a financial hedging tool
- Influence the global adoption of cryptocurrencies, enhancing the United States' leading position in the digital asset market
How Congress authorizes the use of SPR funds for government projects, the future use of cryptocurrency reserves may also be determined by legislation.
4. Bitcoin Reserves: A New Role for the Federal Reserve
If a national-level Bitcoin reserve is established, the Federal Reserve (Fed) will play a similar role to the SPR in the energy market, while the Commodity Futures Trading Commission (CFTC) can take on regulatory functions similar to the DOE, responsible for the execution and regulation of cryptocurrency reserves.
In this model, the Federal Reserve will not only be able to:
- Strategically formulate policies related to cryptocurrencies
- Manage and stabilize the government's held crypto assets
- Ensure the sufficiency of reserve assets to meet fiscal needs and generate revenue
- Protect investor interests and ensure market stability
In addition, the Federal Reserve will still retain its core functions, including:
- Setting interest rates to influence market liquidity
- Borrowing and financing to drive government projects
- Using cryptocurrencies as collateral assets to enhance fiscal flexibility
The Lummis bill also emphasizes that the U.S. Department of the Treasury will play a key role in managing and protecting the Bitcoin reserve, just as it currently collaborates with the Federal Reserve.
1) The Future of Decentralized Crypto Vaults
To enhance transparency and security, the government may adopt decentralized vault systems as the storage solution for the national crypto reserve. The Treasury Department can:
- Manage and regulate the custody of crypto assets to ensure the security of the national reserve
- Establish custody mechanisms that meet regulatory standards to prevent asset misuse
- Ensure the reserve is publicly transparent, meeting the market's trust mechanism for government asset management
This mechanism not only solves the issues of ownership and custody, but also can enhance public confidence in cryptocurrencies, promoting societal recognition of the "full faith in crypto" of the government.
2) The Balancing Act: Efficiency, Innovation, and Development
The concept of a national-level cryptocurrency reserve showcases a vision of reshaping the U.S. economy - it integrates traditional financial principles and emerging digital technologies, driving the financial system towards modernization.
However, the evolution of cryptocurrency policy marks an important turning point, as it gradually transitions from Bitcoin's initial decentralized vision to a more regulated, government-led model.
The core challenge is: how to balance the historical ideals of decentralization, while ensuring users can efficiently and securely use, invest, and innovate with digital assets.
Even though the industry still emphasizes decentralization, its development has reached the stage of urgent need for regulation. Faced with vague legal standards and the lack of consumer protection mechanisms, appropriate government regulation and policy guidance have become inevitable. The new administration's trust and support for cryptocurrencies also indicates that the policy framework is about to be implemented.
The formulation of rules is crucial, because only with clear rules can market participants compete fairly.
By embracing cryptocurrencies, the new administration is poised to drive a future centered on innovation, stability, and global leadership. Whether it is at the federal level, state government initiatives, or regulatory reform, the United States is at the crossroads of the new era of digital assets, and its strategic vision and adaptability will determine the future industry landscape.
3) Balancing Regulation: Challenges and Opportunities in Policy Advancement
Congressional approval still faces resistance. Some lawmakers express concerns about economic stability and inflation issues, while persistent regulatory uncertainty and public skepticism may hinder the implementation of cryptocurrency reserves.
The key task of the new administration is to find a regulatory balance between efficiency and innovation. Only with proper oversight can national-level cryptocurrency reserves and the entire cryptocurrency industry thrive in the United States.
It is worth noting that as other countries accelerate the implementation of cryptocurrency policies, the United States may fall behind in global competition if it does not take proactive measures.
Establishing cryptocurrency reserves and introducing supportive regulations not only can consolidate the United States' leadership position in the global cryptocurrency economy, but also will drive the growth of technological innovation and capital investment.
4) America's Responsibility: Building Confidence in the Global Cryptocurrency Capital Center
The United States has always been a leader in the global capital market with high standards of consumer protection, data security, and financial transaction rules.
If other countries take the lead in digital asset regulation, and the United States fails to keep up, the global market may be affected by more unstable policies. Therefore, the United States should clearly express its full faith in crypto and, as the global cryptocurrency economic center, formulate more robust policies.
Author Introduction:
- Stefanie Wayco is a partner at Duane Morris LLP
- Matthew Catania is a senior attorney
- Gregory Bailey is an attorney
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