Trump’s Bitcoin Reserve Plan: What It Means for Your Crypto

Remember back in November, when it became clear that Trump had been elected President of the United States, I wondered how he would fulfill his campaign promise to create a Bitcoin reserve. At the time, I wrote that I saw only three possible scenarios:

1. Mine Bitcoin directly, which would require investing in ASIC miners or, alternatively, banning private mining operations and seizing their equipment.
2. Aggressively confiscate Bitcoin from criminal activities and keep it instead of returning it to the victims. For example, the government could hold onto the BTC recovered from the hackers who stole from Bitfinex in 2016 instead of giving it back to the exchange.
3. Print money to buy Bitcoin.

Today, by signing an executive order to create a reserve that involves neither mining nor purchasing but does allow for confiscation, it seems Trump has chosen the second path.

This choice carries many risks for ordinary cryptocurrency holders:

• If your cryptocurrency is stolen and later recovered by law enforcement, the government may not be interested in returning it to you. It now has a formal legal basis to keep it.
• If you store your cryptocurrency on an exchange, regulators could accuse that exchange of violating financial regulations, seize your assets, and transfer them to state ownership. The political signal has been sent.

For now, this only applies to the United States. But other countries could follow suit. Why spend money to buy cryptocurrency when they can use enforcement powers to get it for free?

Protect the security of your self-custodied cryptocurrency! Avoid entrusting it to custodians who could face pressure from government authorities. And if you need to exchange it safely, use rabbit.io.