Trump Advisor Proposes Using Bitcoin as National Reserve Asset

• David Bailey, Trump’s advisor, suggests timelocking 210,000 BTC already held by the US for a decade to secure a significant Bitcoin reserve for the Treasury.
• Trump could use the Exchange Stabilization Fund to buy Bitcoin or invoke the Federal Reserve’s emergency powers to establish a Special Purpose Vehicle for Bitcoin purchases, both requiring broad legal interpretations and executive authority.

The crypto market sets a rally following reports that US presidential candidate Donald Trump has appointed a pro-crypto running mate. As outlined in our recent blog post, David Bailey, CEO of Bitcoin Magazine and advisor to the Trump campaign, is known for advocating a comprehensive Bitcoin (BTC) framework under Trump’s potential administration.

Bailey’s contribution as Trump’s advisor suggests that Donald Trump is capable of securing a significant BTC reserve for the US Treasury by taking the 210,000 BTC already held by the USA and timelocking those coins for a decade.

Matthew Pines, a Director at Sentinel One and a National Security Fellow at the Bitcoin Policy Institute, vocalized his opinion through a recent tweet, stating that Trump is expected to pursue two main legal frameworks.

Thinking out loud…

Let’s assume Trump decided he wanted the USG to buy and hold Bitcoin as a financial asset on the national balance sheet (as may be announced next Sat…). I know this sounds bonkers and not serious (for now…), but play along…

Under what existing legal…

— Matthew Pines (@matthew_pines) July 16, 2024

In his tweet, Pines highlighted two potential approaches that Trump could execute, despite requiring intensive visualization of the statutory language and exertion of unitary executive powers. These approaches would rely on courts deferential to Executive prerogatives when facing legal challenges detailed below.

Leveraging the Exchange Stabilization Fund (ESF) to Acquire Bitcoin

Trump could instruct the Treasury Secretary to use the ESF to buy Bitcoin. By this approach, broadening the interpretation of the Gold Reserve Act of 1934 would be needed, which allows the Treasury to get involved in transactions including “foreign exchange” and other financial tools.

Pines suggests that “foreign exchange” could be considered as Bitcoin due to its global usage and recognition as a sovereign currency by El Salvador, or as a security, such as ETF shares. Transactions using the ESF must be reported to Congress quarterly, but Congress cannot prevent them.

Applying the Federal Reserve’s Emergency Powers

Previously, CNF outlined that Bernstein analysts predict crypto could become the primary “Trump Trade” in the current election cycle as Republican prospects improve. Using his political and economic status, Pines advises that Trump could also suggest to the Federal Reserve to invoke its 13(3) emergency powers for “unusual and exigent circumstances” to establish a Special Purpose Vehicle (SPV) that would then purchase Bitcoin.

At the time of writing, Bitcoin (BTC) is trading at $64,754.42 with a slight decrease of 0.71% in the past day and an increase of 11.23% in the past week. See price chart below.