Why the US will Adopt Budget Neutral Ways for a Strategic Bitcoin Reserve

After stating that the US government wasn’t going to buy Bitcoin, Treasury Secretary Scott Bessent has revealed the Trump administration would employ budget-neutral ways to build the country’s Strategic Bitcoin Reserve.

According to an August 14 social media X post by Scott Bessent, plans to acquire more assets for the Strategic Bitcoin Reserve were still on the table, but the government will not be spending a dime, at least not yet.

Strategic Bitcoin Reserve Still in Place

Bessent had earlier announced that the US government wasn’t purchasing Bitcoin but would instead rely on assets that get confiscated. Commenting on his social media post, Bessent stated:

“Bitcoin that has been finally forfeited to the federal government will be the foundation of the Strategic Bitcoin Reserve that President Trump established in his March Executive Order.”

Additionally, Bessent revealed that the government was exploring budget-neutral tactics for the acquisition to expand the Strategic Bitcoin Reserve. All this he said was in a bid to execute on President Donald Trump’s pledge to make the United States of America the “Bitcoin superpower of the world.”

Bessent’s clarification came hot on the heels of his appearance on Fox Business earlier Thursday, where he emphasized the plans for the Strategic Bitcoin Reserve being built from seized Bitcoin holdings, which the government would no longer sell.  The official stated:

“We’ve also started… a bitcoin strategic reserve. We’re not going to be buying that, but we are going to use confiscated assets and continue to build that up. We’re going to stop selling that.”

Shift in Opinion

The apparent shift in opinion by the US Treasury Secretary has created a buzz among cryptocurrency supporters. Some have a feeling that the US administration was backtracking to influence market sentiment. Citing the earlier statement by Bessent that he government would no longer buy Bitcoin, followed by a Tweet later the same day mentioning budget-neutral ways to build the Strategic Bitcoin Reserve, a user on X stated:

“Someone in the administration or a major donor whispered in his ear after that interview to soften the market blow.”

Believers in Direct Purchases

Yet another user proposed a more direct approach, stating that:

“Confiscation is not the way. Just buy some bitcoin/hard money with dollars you can print. It’s cleaner.”

Other users believe the US government would eventually buy later. One such user stated:

“They also didn’t rule out budget-neutral buys in the future. That could mean selling some gold, using Fed surpluses, or swapping out other assets to stack BTC without ‘new spending.'”

Another user, Samson Mow, who believes in directed purchasing, tweeted:

 “There will be buying. There are several budget-neutral ways to acquire Bitcoin, such as issuing Bitcoin bonds or selling gold. Give it some time.”

Conclusion

Bessent’s clarification and proposal to use budget-neutral ways may have assured some Bitcoin proponents. However, many others are still concerned that the Treasury Department may never execute the plan. Supporters of the Strategic Bitcoin Reserve believe that the use of seized tactics would avoid spending but still position the US as a contender in global bitcoin policy.

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Summary

• Treasury Secretary Scott Bessent has stirred controversy with his comment that the Trump administration won’t purchase Bitcoin.
• Bessent revealed that the government would instead use budget-neutral ways to support the Strategic Bitcoin Reserve.
• Bitcoin proponents have been eager for details on how the Trump administration will manage the strategic reserve.

Frequently Asked Questions

What would be the point of an SBR?

A strategic crypto reserve is a policy signal reflecting how governments choose to engage with the digital economy and their vision on the evolution of monetary strategy in a technology-driven world.

What are the pros and cons of the Bitcoin reserve?

A national Bitcoin reserve concept is both innovative and contentious. It may offer potential benefits like economic stability and geopolitical strength, but it carries significant risks like price volatility and management difficulties.

How does a cryptocurrency reserve work?

A strategic crypto reserve refers to the intentional holding of crypto as a reserve asset by corporations, institutions, or governments to strengthen financial security, hedge against inflation, and diversify investments.

Glossary to Key Terms

Strategic Bitcoin Reserve: A government’s, institution’s, or corporation’s deliberate accumulation of Bitcoin as part of their financial strategy, similar to traditional reserves like gold or foreign currencies.

Executive Order: An executive order is a directive issued by the head of state or government that manages the operations of a nation’s federal administration.

Reference

Scott Bessent on X

 

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