Prospects for Trump’s Bitcoin strategic reserve are limited- Compass Point

The prospects for a proposed strategic Bitcoin reserve under Donald Trump’s administration are limited, Compass Point Research said in a note, citing potential regulatory and fiscal hurdles.

Compass also flagged little potential that the recently introduced BITCOIN Act- which calls on the Treasury to accumulate the cryptocurrency- will become law. 

Compass said that while Trump could sign an executive order for the Treasury to establish a Bitcoin strategic reserve, a future administration could easily rescind the order. 

This would make the Bitcoin reserve unlike other government reserves, such as the strategic petroleum reserve, which were formed by legislation passed through Congress. 

The Treasury also has no Congressional authorization to use government funds to acquire Bitcoin, and it appears unlikely that a Republican controlled Congress- which is aiming to reduce fiscal spending- will approve funds for this purpose. 

Compass said that an elevated Federal deficit means that the government does not have additional deficit funding it can deploy to purchase Bitcoin. Government agencies will have to use discretionary funds to buy Bitcoin, which are severely limited in scope.

The Bitcoin Act- which was proposed by Senator Cynthia Lummis, and called on the Treasury to deficit finance the purchase of 1 million Bitcoin over five years- was likely to be a “nonstarter,” Compass said. 

The brokerage sees a less than 10% chance the act will become law before 2026. 

Bitcoin rallied to record highs for the past three weeks on heightened expectations that Trump will dole out more crypto-friendly regulations. The coin stopped just shy of $100,000. 

But crypto markets saw some easing in recent sessions, as traders awaited more tangible cues on policy from Trump. 

Source: Investing.com