This morning, the long-awaited Bitcoin Strategic Reserve Executive Order for the crypto industry finally arrived. Around 8 a.m. on March 7, White House AI and Cryptocurrency Czar David Sacks posted on social media that President Trump had just signed an executive order to establish a strategic Bitcoin reserve. However, after this massive bullish news broke, the price of Bitcoin surprisingly took a nosedive, dropping from around $90,000 to below $85,000 within an hour. At the time of writing, the Bitcoin price had recovered to around $88,000.

It is worth noting that the reserve fund for this strategic reserve will be capitalized with Bitcoin owned by the federal government, specifically Bitcoin seized by the U.S. government in criminal or civil asset forfeiture proceedings. The U.S. government will not sell any Bitcoin deposited into the reserve, but is also unlikely to further purchase more Bitcoin, meaning "it won't cost taxpayers a dime," as David Sacks wrote in a tweet.

HODL-only Approach Triggers Sell The News

In January of this year, Trump signed an executive order directing his government to assess the "possibility of establishing and maintaining a national digital asset reserve" and established a working group to study the feasibility, with David Sacks as the chairman. 10x Research analyst Marcus pointed out in his report on the strategic reserve that there is a key distinction between "reserve" and "establishing and maintaining a national digital asset reserve."

The term "reserve" implies an active strategy to acquire more assets, while "establishing and maintaining" suggests a more passive approach, namely a "HODL-only" strategy. Marcus mentioned in the report that although the executive order targeted a broader range of digital assets rather than just Bitcoin, it also means that the U.S. government is more inclined to continue holding its existing cryptocurrency rather than purchasing more crypto assets.

On the other hand, Trump's Bitcoin Strategic Reserve Executive Order has not yet received approval from Congress, and it will take several months to be formally passed and enacted, further fueling traders' Sell The News sentiment and motivation.

The U.S. government's handling of currency, reserves, and financial assets is subject to oversight by institutions such as the Treasury Department and the Federal Reserve. Unlike gold or oil, Bitcoin is not a tangible asset that governments can store in the traditional sense; it is a decentralized digital currency. Therefore, maintaining a reserve means the government needs to securely store Bitcoin through a series of formal processes, which will raise further questions about funding, security, and other aspects.

However, many practitioners closely associated with the current pro-crypto administration have also expressed a positive view of this executive order.

White House AI and Cryptocurrency Czar David Sacks took to social media to state, "The early sale of Bitcoin by the U.S. government has cost American taxpayers over $17 billion. Now, the federal government will develop a strategy to maximize the value of its Bitcoin holdings." Coinbase executive Conor Grogan also posted on social media, saying, "By my estimate, the U.S. government holds 198,109 bitcoins. This executive order will alleviate approximately $18 billion of selling pressure."

It is also worth noting that, in addition to the federal government's efforts regarding a Bitcoin strategic reserve, many states in the U.S. have been actively responding in this area. As of now, 18 states in the U.S. have considered or proposed legislation to establish a state-level strategic Bitcoin reserve. On February 27, the Texas Senate Business and Commerce Committee took the lead in deliberating on a Bitcoin reserve bill and submitted it for Senate consideration.

The bill aims to establish a state government-controlled Bitcoin reserve to enhance financial security and drive digital asset innovation. Its key provisions include: authorizing the Texas government to hold Bitcoin as a financial asset, managed by the Texas Comptroller's Office, implementing a cold storage solution with regular audits, prohibiting the acquisition of Bitcoin from foreign entities or individuals involved in illegal activities, among others. If the bill receives a two-thirds majority in the Senate, it will take immediate effect; otherwise, it will officially take effect on September 1, 2025.

Then, on March 7, the Texas State Senate passed the Strategic Bitcoin Reserve bill SB-21 with 25 votes in favor and 5 against. Subsequently, SB-21 needs to be submitted to the Texas House of Representatives, where it will be assigned to relevant committees for review, amendment, and hearings.

If the House amends SB 21, the Senate must agree to those amendments, or both sides must reconcile a final version through a conference committee. The final version agreed upon by both will then go through separate voting processes. Upon approval by both the House and the Senate, the bill will be sent to the Governor of Texas for signing. The Governor can choose to sign the bill into law.

Soul Searching Question: Will the Bitcoin seized in the Bitfinex case be returned?

Currently, the U.S. government holds approximately 200,000 bitcoins, valued at around $18 billion at the current price. These bitcoins were seized through various law enforcement actions, with the two main sources being the bitcoins confiscated in the Silk Road case and those seized in the 2016 Bitfinex exchange hack case.

Related Reading:《US Government Bitcoin Addresses》

In February 2022, the US Department of Justice (DOJ) seized over 90,000 bitcoins from the Bitfinex hack case. The involved hackers, Ilya Lichtenstein and Heather Morgan, were arrested and convicted for money laundering. Lichtenstein admitted to orchestrating the hack, after which the US government held the seized bitcoins as forfeited assets.

Following the Bitcoin Strategic Reserve Executive Order, the question of "Should Bitfinex's bitcoins be returned?" has become the most pressing concern for many industry participants, as this portion of bitcoins represents nearly 50% of the US government's bitcoin holdings.

The key issue revolves around Bitfinex's post-hack compensation plan: after the hack in 2016, Bitfinex haircut all customer balances by 36% and issued BFX (LEO) tokens, which were fully redeemed within eight months. In the government's view, this effectively made customers "whole." Thus, the entity bearing the losses, Bitfinex, is seen as the primary claimant.

In October 2024, the US Attorney's Office for the District of Columbia filed a motion suggesting that Bitfinex may be the "only victim" eligible for compensation under the Crime Victims' Rights Act (CVRA) and Mandatory Victims Restitution Act (MVRA). This stance was further reinforced in a document dated January 2025, where the government proposed to return the bitcoins "in-kind" (BTC, not cash) to Bitfinex.

Related Reading:《US Government States 2016 Hacker's Funds Should Return to Bitfinex》

Prior to this, Bitfinex had promised that once it recovers the bitcoins from the hack, it would buy back LEO. Many former Bitfinex customers believe that, given the significant appreciation of bitcoin since 2016, they are entitled to the recovered bitcoins and argue that the compensation in Bitfinex's LEO token did not reflect the future value of BTC.

So, after news broke in October 2024 that the U.S. government had filed a substitution notice motion to notify potential victims of the 2016 Bitfinex hack, the Bitfinex platform's token LEO quickly surged by nearly 40%, indicating the market's anticipation of the U.S. government returning the stolen bitcoins and Bitfinex's buyback plan.

Of course, with the signing of the Strategic Reserve Executive Order, the U.S. government's position could change at any time.

What Else Can We Expect from the White House Crypto Summit?

Additionally, David Sacks also mentioned in a tweet this morning that the executive order also establishes the "U.S. Digital Asset Reserve," which is tasked with managing government digital assets under the leadership of the Treasury Department.

For David Sacks, the upcoming White House Crypto Summit is a top priority. This summit is the first of its kind hosted by the White House and is of a high level of significance. According to various media reports, the most eye-catching aspect of this summit may be the "National Crypto Strategic Reserve" plan. This plan aims to include mainstream cryptocurrencies such as Bitcoin, Ethereum, Solana, Cardano, and Ripple (XRP) in the national reserve system, with a scale and function similar to traditional oil reserves. As revealed by Forbes, the selection of reserve assets takes into account the characteristics of each currency: Bitcoin for its inflation-resistant "digital gold" properties, Ethereum for its smart contract ecosystem, Solana as a high-performance application platform, Cardano for its research-driven secure architecture, and Ripple for its cross-border payment efficiency.

In terms of regulatory system development, the summit will focus on discussions regarding stablecoins and the top-level design of the overall regulatory framework. Cointelegraph has disclosed that Trump advisor David Sacks advocates strengthening the dominance of the dollar through stablecoins, a viewpoint that may influence federal regulatory schemes. Currently, a draft bill being advanced by the House Financial Services Committee shows that stablecoin issuers with a circulation exceeding one hundred billion US dollars may be brought into the Fed's regulatory system, forming a dual-layer regulatory framework spanning federal and state governments. Additionally, the "21st Century Financial Innovation and Technology Act," proposed in 2023, may see substantive progress, with its core focus on coordinating the regulatory authority of the SEC and CFTC to construct a digital asset regulatory paradigm that balances innovation and security.

To achieve the strategic goal of becoming the "Crypto Capital," the summit may introduce a series of innovation incentives and tax-related policies. CryptoBriefing analysis indicates that the government may relax regulatory constraints from the Biden era. An unexpected detail is that the summit may also discuss crypto-related tax reforms. According to BeInCrypto, tax reform may be part of the agenda, potentially affecting investors' tax burdens, involving simplifying tax reporting for crypto transactions or providing tax incentives to promote industry growth.

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