Trump's Crypto Reserve Plan May Need Congress' Approval. There's Reason for Skepticism. — Barrons.com

By Joe LightPresident Donald Trump's goal to create a crypto strategic reserve has a major problem. Any attempt will most likely require Congress to pass a bill, and Republican-led efforts in red states to create a similar fund are failing.Trump said Sunday on TruthSocial that an executive order he made in January directed a crypto working group to create a "U.S. Crypto Reserve" to include Bitcoin, as well as much smaller coins including Ether, ADA, XRP and SOL.The post sent crypto prices soaring in part because Trump's order in January — in contrast to what Trump said in Sunday's post — was actually much more limited in scope and had merely called for a digital asset stockpile potentially derived from cryptocurrencies seized during law enforcement efforts. A reserve, on the other hand, is typically understood to mean the government would actively buy cryptocurrencies.After rising on Sunday, cryptocurrencies on Monday gave up some of their gains. Bitcoin has fallen 7.4% in the last 24 hours to about $87,000, while Ether, Solana, and XRP have fallen 12% to 14% after rising more than 20% in the hours after the president's post.Investors should be skeptical that a robust U.S. crypto reserve will actually come to fruition.Take Wyoming, one of the most crypto-friendly states in the country. Many digital asset firms are headquartered in the state, which has passed crypto-friendly laws, and Sen. Cynthia Lummis (R, Wyo.) is the leading congressional proponent of creating a Bitcoin reserve.A Wyoming House committee in February overwhelmingly rejected a bill that would have allowed the state treasurer to invest around half a billion dollars in Bitcoin. The chief investment officer for the state treasurer spoke against the bill, citing Bitcoin's historically high volatility as "the types of things that we do not want in our portfolio, " according to Wyoming Public Media.Other states that have rejected similar bills this year include Montana, South Dakota, North Dakota, and Pennsylvania.For the U.S. to have a crypto reserve, Congress would most likely have to pass a bill appropriating funds for one. To that end, there is little sign a reserve holding Bitcoin, let alone one holding smaller assets, has enough buy-in from Congress to pass."We have some work to do both in the U.S. House and in the U.S. Senate in helping people understand the reasons why we should have a strategic Bitcoin reserve," Lummis said in an interview with Yahoo Finance before Trump's post.Asked if she thought the reserve should hold other assets, Lummis suggested many other digital assets didn't have attributes desirable for a reserve.Spokespeople for Lummis didn't respond to a request for comment on Monday.A White House spokesperson referred a request for comment to a post on X from White House crypto czar David Sacks, who said more details would come at a White House crypto summit scheduled for Friday.Having a reserve for Bitcoin or other cryptocurrencies is also a polarizing issue within the crypto industry, which historically has prided itself on cryptocurrencies not being beholden to governments for their value.Without congressional buy-in, the Trump administration's options for creating a reserve are limited. The easiest move would be for the government to hold on to the Bitcoin or other cryptocurrencies it acquires when busting fraud or hacker rings. The Justice Department has traditionally sold digital assets, but it could argue it has the leeway to hold off on such sales.Some Bitcoin advocates have also argued the Treasury Department could use the Exchange Stabilization Fund to buy Bitcoin. The fund, established decades ago by the Gold Reserve Act, lets the Treasury secretary intervene in foreign exchange markets to support the dollar. The law doesn't allow the Treasury to buy Bitcoin directly, but it does let the government buy "instruments of credit," which Bitcoin proponents say could be a workaround. The secretary, they say, could tell the Treasury to buy debt that's paid back in Bitcoin, for example.Such a move, for now, seems "more academic than actionable at this point, " said Isaac Boltansky, BTIG director of policy research.On the other hand, if Trump relies on Congress, a Bitcoin reserve could be dead on arrival — at least for now."I struggle to see this effort getting 60 votes in the near-term, but the digital asset industry seems to be gaining power every day," Boltansky said.Write to Joe Light at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.