181 days have passed from July 27, 2024 until now. That is, almost 6 months have passed since Donald Trump made pro-Bitcoin promises before an audience that cheered him on stage at the Bitcoin 2024 conference in Nashville, United States. And yesterday, as president, he signed an executive order that, despite his previous promises, does not mention the pioneering digital currency. The question everyone asks is: Why?
The previous question remains up in the air, while highlighting the fact that El Salvador focuses exclusively on bitcoin to establish its national digital asset reserve. While El Salvador adopted a clear and specific strategy based on the creation of Satoshi Nakamoto, Trump’s executive order has a broader focus on “digital assets,” without specifying the crypto asset he once promised to include. This shift in policy could redefine the future of cryptocurrencies as a global reserve asset.
In itself, the document titled “Executive Order to Establish United States Leadership in Digital Financial Technology” does not explicitly mention the term “Bitcoin strategic reserve.” However, it does address the concept indirectly.
In Section 4, it mentions the creation of a Presidential Working Group on Digital Asset Markets, which, among the assigned tasks, has the task of evaluating «the possible creation and maintenance of a national reserve of digital assets and propose criteria for establishing such a reserve, potentially derived from cryptocurrencies legally seized by the Federal Government through its law enforcement efforts.
Possible composition of the US digital asset reserve:
It means that if the US national stockpile of digital assets were based on the cryptocurrencies it has seized, its portfolio could include a wide range of cryptocurrencies. In addition to bitcoin, the reserve could contain ether (ETH, the crypto asset of the Ethereum network), which has been moved and transferred by the government on several occasions, how it reflects Arkham Intelligence.
Also the US reversal could include Shiba Inu (SHIB), which has become a notable asset within government seizures. Another addition would be BUSD (Binance USD), a stablecoin that the government has confiscated.
Additionally, the reserve could be diversified with other altcoins such as Compound (COMP), Numeraire (NMR), Wrapped Bitcoin (WBTC), Yearn.finance (YFI), and Axie Infinity (AXS). All of these cryptocurrencies have been part of the seizures made by the government in operations against illegal activities.
While the executive order signed by Trump considers the possibility of creating a national reserve of digital assets, It does not detail how this reservation would work nor its management or strategic use, beyond the possibility that it is made up of seized assets.
The rest of the document focuses on broader policy objectives, such as promoting innovation in digital assets, protecting economic freedoms, regulatory clarity, and banning central bank-issued digital currencies (CBDCs). The aspect of the reserve of digital assets, although mentioned, seems to be part of a strategy that will be executed in other instances to manage cryptocurrencies within the United States regulatory framework.
Therefore, the reserve executive order that omits explicit mention of bitcoin can be interpreted as a broader political and economic strategy. Trump could be looking to not limit US policies to a single cryptocurrency. This with the idea of giving greater inclusion of other digital assets with economic potential. The omission could also reflect a tactic of regulatory flexibility, in which the government avoids being tied to Bitcoin exclusively, allowing regulations to be adjusted according to the dynamic cryptocurrency market and future economic needs.
Furthermore, Trump’s decision could be influenced by pressure from various interest groups within the financial and technology sector, who could prefer or worry about altcoins. Another interpretation is a possible change of priorities or distancing towards Bitcoin, considering its stability, security and the difficulty of regulation.
The executive order could be seen as a recognition of campaign promises as electoral strategies, while the reality of governing requires a more diverse and prudent approach. Likewise, this order could just be a prelude to a more detailed and specific policy that will be released in the future, leaving room for Bitcoin to have a defined role in upcoming regulations. In any case, we must wait for the course of events to know if there really is a bitcoiner policy and the creation of a strategic bitcoin reserve, as there is in El Salvador.
El Salvador and its Bitcoin reserve
Under the leadership of its president Nayib Bukele El Salvador established a national reserves strategy, marking a milestone for how nations can approach asset management in the digital age. In March of last year, Bukele revealed the address where the BTC funds held by the Central American country are stored. “You can call it our first bitcoin piggy bank,” the Salvadoran ruler said at the time.
The government also implements a strategy of continuous bitcoin purchases, known as DCA (Dollar Cost Averaging), which consists of establishing a plan for periodic purchases of the asset, allocating a fixed amount for a certain time, regardless of the price. This is with the idea of reducing the impact of price fluctuations.
So, since the initial purchase of bitcoin in 2021, El Salvador has seen how The value of your bitcoin reserve increases over timea strategy that can generate significant benefits for the national economy.
Bukele also usually announces larger purchases of bitcoin when the price falls, taking advantage of discounts to increase El Salvador’s reserves. With all this, it is clear that the main attraction of bitcoin as a store of value lies in its limited supply and its decentralized nature.
Bitcoin has a limited supply of 21 million BTC and an issuance that decreases every four years due to halving. That makes it a shelter against inflation that no other altcoin can provide, much less fiat currencies, which can be inflated by money printing by central banks. El Salvador, by incorporating bitcoin into its reserves, protects itself against the erosion of the value of its assets due to global inflation.
On the other hand, by integrating bitcoin into its reserve portfolio, El Salvador diversifies its assets beyond traditional stocks, bonds and precious metals. This diversification not only reduces dependence on a single type of asset, but also It acts as a hedging strategy against economic and geopolitical risks. In a context where global economies are interconnected, having bitcoin as part of national reserves can offer a buffer against international financial instability.
Unlike gold, which requires physical storage and faces logistical challenges to transport, bitcoin is easily transferred and stored digitally. This feature allows El Salvador to manage its international reserves with a flexibility and efficiency that is not possible with traditional assets, saving on costs and associated complexities.
El Salvador vs. US: Differences in your digital booking strategies
El Salvador has a distinctive and clear economic strategy by focusing on bitcoin for its digital reserves, with defined objectives of boosting the Salvadoran economy and reducing dependence on the US dollar.
In the United States, the executive order signed by President Donald Trump seeks to strengthen regulation and protect the sovereignty of the dollar, while evaluating the possibility of creating a digital reserve, although without giving specific prominence to bitcoinwhich leaves many questions about the direction this policy will take in the future.
El Salvador, on the other hand, made significant progress in the implementation of its cryptoasset reserve strategy by making public the address of its bitcoin reserve, promoting transparency, becoming a role model, serving as an inspiration and model for other countries contemplating follow a similar route.
On the other hand, the United States is in a preliminary stage regarding the implementation of a cryptoasset reserve; The recent executive order proposes the creation of a working group tasked with analyzing and designing policies, indicating that the configuration of cryptocurrency reserves is still in the process of formulation and no concrete steps have been taken in that direction.
