Trump blends ambition and insecurity in the Blockchain Age

The US government currently holds around 198,000 Bitcoin worth an estimated $17.4 billion, all seized as part of criminal or civil asset forfeiture proceedings. In addition to the Bitcoin reserve, Trump has named several so-called ‘altcoins’ that will form its ‘stockpile’, including Ethereum, Solana, XRP and Cardano.

 

This adoption of crypto at the government level positions the US at the forefront of financial innovation but also raises complex questions about feasibility, security, and long-term economic stability. Regulating crypto will provide a legal channel for users to invest, trade and use crypto and will encourage mass adoption of blockchain technology. However, crypto (like Trump) is notoriously volatile. The fact that it is prone to dramatic, often sudden fluctuations in price, represents a tangible risk and one that will not be mitigated by the creation of a strategic reserve.

 

 

Bitcoin has been chosen for the strategic reserve because it has a fixed supply and has never been hacked. Altcoins on the other hand remain vulnerable to cyber-attacks. While many in the industry welcome the creation of a crypto strategic reserve, the question now is how to administer and control it.

 

Most crypto is kept in so-called digital wallets, of which there are two kinds: custodial, where crypto is kept in a wallet owned by a third-party, such as an exchange, and non-custodial, where users themselves hold the ‘keys.’

 

The dangers of leaving crypto in custodial wallets was evidenced recently after hackers stole $1.3 billion of Ethereum from the Bybit exchange. The 2023 collapse of trading platform FTX provides yet another cautionary tale.

 

Cyber attack threats

 

It remains to be seen how the US Treasury will keep its crypto safe. Non-hackable solutions are available in the form of hardware wallets and software-based multi-signature wallets, which require multiple signatures to both access accounts and approve transactions.

 

But security concerns extend beyond digital wallets. A federal crypto reserve would be a high-value target for state-sponsored cyberattacks. It is worth noting that in 2022, North Korea’s Lazarus Group stole a total of $1.7 billion in crypto. To counter such threats, the US would need air-gapped cold storage systems, hardware wallets, biometric access controls, and real-time network monitoring—capabilities that exist today but which have never been tested at scale.

 

Regulatory ambiguity in the cryptosphere further complicates matters. The US Securities and Exchange Commission’s (SEC) ongoing lawsuit against Ripple over the legal status of its XRP token underscores the jurisdictional chaos surrounding crypto. Although Ripple won their lawsuit last year, the SEC appealed, meaning the case is technically still live, although given Trump specifically included XRP in his ‘stockpile’, some think it is now likely the US regulator may drop its legal action. Regardless, any federal reserve holding such assets could still face legal challenges, particularly if market fluctuations lead to taxpayer losses.

 

Bitcoin vs the environment

 

Accounting practices also present hurdles that must be overcome. For example, how would the US Treasury market a reserve that could potentially lose 50% of its value in a matter of weeks? Environmental concerns add another layer of complexity. Bitcoin mining consumes more energy annually than Sweden, clashing with federal climate goals.

 

Governance remains the major issue, though. Who controls the keys? How will transactions be audited without exposing vulnerabilities? The US Treasury would not be able to approve transactions and control the keys alone – what is needed is a ‘crypto reserve board’, requiring consensus among multiple agencies to balance security and transparency. Meanwhile, public ‘proof-of-reserve’ audits, while enhancing trust, could inadvertently reveal transaction patterns to adversaries.

 

Despite these obstacles, the creation of a digital assets reserve creates huge opportunities. A well-managed crypto reserve could counter China’s digital yuan and El Salvador’s Bitcoin experiment (it became the first country in the world to recognise Bitcoin as legal tender in 2021), asserting US influence in the digital economy. It might also pressure Congress to pass clearer regulations, fostering industry growth. A phased approach, starting with limited Bitcoin and Ethereum holdings while establishing custody standards and global regulatory coalitions, would be prudent.

 

 

Blockchain Age

 

Currently, the US Government is not planning to buy new Bitcoin to add to its reserve. However, in future, it is likely they will, probably by using seized stablecoins and altcoins to avoid using taxpayer funds.

 

The US is the first nation to add Bitcoin into a strategic reserve. Now the race will begin for other countries to accumulate more ‘digital gold’ and develop their own regulatory frameworks. This will only increase demand for crypto but that doesn’t necessarily mean prices will go up. Those familiar with Bitcoin will know its value is affected by many variables, one being the periodic bear and bull cycles that affect other markets.

 

In conclusion, Trump’s vision merges ambition with insecurity. While crypto reserves could redefine economic power in the blockchain age, the path forward demands diligent planning, cross-sector collaboration, and humility in the face of technological uncertainty. Without these, the US risks not just financial loss, but an erosion of trust in its ability to steward the next frontier of money.

 

About the author

 

 

Syed Noman Ali Sherazi graduated with an MSc in Cyber Security from the School of Computer Science, AI and Electronics at the University of Bradford in September 2023 and now runs his own company developing blockchain and AI-based software solutions and cyber security services for business.

 

A version of this opinion piece appeared in The Yorkshire Post on March 13, 2025.