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President Donald Trump has signed an executive order mandating the creation of a Bitcoin reserve under US government control. The initiative, described by the newly appointed crypto czar David Sacks as a “digital Fort Knox,” will house Bitcoin assets acquired through criminal and civil forfeitures. The government currently holds an estimated 200,000 Bitcoin in such assets.
Stockpile for Digital Assets
In addition to Bitcoin, the executive order instructs the Secretary of the Treasury to establish a reserve for other digital assets. The order permits the government to explore ways of acquiring additional Bitcoin, provided the acquisition does not “impose incremental costs on United States taxpayers.” This clause implies that taxpayer funds will not be used to purchase Bitcoin directly.
David Sacks emphasized the government’s commitment to holding the Bitcoin as a long-term store of value. In a statement on X, Sacks said, “It will be kept as a store of value. Premature sales of Bitcoin have already cost U.S. taxpayers over $17 billion in lost value. Now the federal government will have a strategy to maximize the value of its holdings.”
Seized Assets from Bitfinex Hack To Be Put in Digital Fort Knox
Bitcoin’s price has experienced significant volatility, with the cryptocurrency dipping below $25,000 in June 2022 during a widespread crypto market downturn. As of now, Bitcoin trades at $86,000.
A significant portion of the US government’s Bitcoin reserve originates from the 2016 Bitfinex exchange hack. Ilya “Dutch” Lichtenstein and his wife Heather Morgan, also known as Razzlekkan, were found to have stolen 120,000 Bitcoin from the exchange. The seized Bitcoin from this case forms a notable part of the government’s stockpile.
Treasury Secretary Scott Bessent, speaking on CNBC, stated that seized assets would be transferred into the Bitcoin reserve “after the victims are paid.” However, the method of compensation remains uncertain. It is unclear whether victims will receive the actual Bitcoin they lost or the cash equivalent based on the asset’s value at the time of the theft – a value considerably lower than current market rates.
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