President Donald Trump has announced the construction of a “Crypto Strategic Reserve” which will include five digital assets.
The announcement is based on various promises made by Trump’s campaign, including establishing the United States as the “Crypto Rajdhani of the world” and strengthening the country’s financial infrastructure.
The suggested crypto included bitcoin (BTC), atherium (eth), Ripple (XRP), Solana (Sol), and Cardano (ADA).
Andrew O’Neel, Managing Director of Digital Assets in S&P global ratings, provided insight on Trump’s latest announcement.
O’Neel stated that bitcoin stands out as an alternative monetary property and may stand as a hedge against long -term currency debutment and debt stability. He said:
“In the context of the investment of a sovereign, the story to allocate BTC to some part is similar to gold, to support hedging and debt stability against long -term currency debate,”
Adoption
Other cryptocurrency in the proposed reserve serves various objectives. Etharium and solana focus on adopting technology, enabling decentralized applications and smart contract functionality. Meanwhile, Cardano and XRP are considered more speculative investment due to relatively low adopting rates.
O’Neel highlighted that the investment in these assets varies from bitcoin, as technology enterprises are less common for investment sovereign institutions.
O’Neel said, “Investing these assets vary greatly from BTC and Tech Venture Investment is less common for sovereign.” “Prior to the election, Senator Lummis proposed to the bitcoin strategic reserve with nuance, which included funding at a long holding period of at least 20 years and re -starting the Fed’s existing gold certificate.”
Lummis’s proposal imagined the American Treasury to receive a million bitcoin in five years, with a target to bolst the US balance sheet and ensure transparent management of bitcoin holdings, with a mandatory holding period of at least 20 years.
His proposal also suggested financing of bitcoin purchases through methods such as rejecting the Gold Certificate of Federal Reserve.
Absence of details
Unlike Lummis’s structured plan, Trump’s proposal has so far provided details on the size, time or management of the Crypto Strategic Reserve.
O’Neel reported that without these nuances, it is difficult to assess the potential impact of the initiative and the implementation strategy.
“Tomorrow’s proposal lacks size, timely details, and whether it will be managed by Federal Reserve or any other or existing unit,” O’Nell said.
