March 10, 2025 | Read Online

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"Success can be an enemy."

— Nick Saban

A successful SBR could prove bitcoin's enemy

In equities research reports, the rating system for stocks usually has three easily understood tiers: buy, sell and hold.

That's nicely intuitive, because what else can you do with a stock other than buy, sell or hold it?

But you also sometimes see a recommendation to "accumulate" a stock — a rating considered more than a hold but less than a buy.

How exactly one goes about accumulating a stock without buying it goes unexplained, unfortunately.

I've asked a few of the analysts making such recommendations and have never gotten anything other than a laugh in return.

As best I can tell, "accumulate" is just an analyst's way of expressing a low-conviction belief that a stock is worth buying.

Last week's White House endorsement of bitcoin felt similarly low-conviction to me.

The executive order establishing a strategic reserve assures American taxpayers that the government won't buy bitcoin.

But it might still accumulate:

"The Secretary of the Treasury and the Secretary of Commerce shall develop strategies for acquiring additional Government BTC provided that such strategies are budget neutral and do not impose incremental costs on United States taxpayers."

(Emphasis added because "Government BTC" feels like an oxymoron that should make any true Bitcoiner's skin crawl.)

No such budget-neutral strategy was shared at Friday's crypto summit and I suspect that's because no one had any good ones to share.

The BITCOIN Act that first suggested the strategic reserve proposed financing the purchase of bitcoin by revaluing the government's gold holdings.

But this is just smoke-and-mirrors accounting — borrowing against revalued gold would be more expensive than just taking on more Treasury debt, as George Selgin explains.

Another suggestion is that the Treasury secretary use the exchange stabilization fund to buy bitcoin.

But you can't make a serious argument that the dollar needs stabilizing at the moment (the yen and euro currently held in the ESF are collecting dust because they haven't been needed in decades).

Taken literally, "budget neutral" might also mean that the administration can redirect some of the cost savings enacted by DOGE to buy bitcoin.

But firing park rangers to invest in magic internet money is probably not good politics.

Maybe the president will sell his proposed gold cards for bitcoin (like Trump watches) and put the proceeds straight into the strategic reserve?

But I'm not sure how popular that would be, either.

I have my own suggestion: The truly budget-neutral way to fund the strategic bitcoin reserve would be to levy a transaction fee on every sale of bitcoin made on a centralized exchange.

This is how the SEC is funded (with a tiny fee imposed on every sale of stock), so why not fund the SBR the same way?

But I don't think bitcoiners want to foot the bill anymore than the general taxpayer does, so that probably won't be how the accumulating happens either.

However it happens, the executive order promises that "Government BTC deposited into the strategic bitcoin reserve shall not be sold."

Very admirable!

But the first crypto president didn't sound particularly convinced on Friday: "Never sell your bitcoin. That's a little phrase that they have. I don't know if that's right or not. Who the hell knows, right?"

"Who the hell knows" is a pretty tepid endorsement of bitcoin, and perhaps a telling one.

If a strategic bitcoin reserve is such a strategic idea, why not use taxpayer money to fund it?

That, at least, is easily explained: Buying bitcoin with taxpayer money would require an act of Congress.

Congress is even more tepid than the president on the idea, so the best he could do is issue an executive order establishing a "budget neutral" reserve that will only accumulate bitcoin, not buy it.

Pretty clever, I'll admit.

But the problem with executive orders is that they tend to be reversed.

President Biden, for example, reversed at least 62 of President Trump's executive orders.

Selling the government's bitcoin therefore seems destined to become the "revenue neutral" way for the next Democrat administration (assuming there is one) to fulfill one of their campaign promises that they can't get through Congress.

Or, perhaps more worryingly, it could go the other way entirely.

If the next president is less tepid in their support of the SBR, they might decide to not just buy bitcoin, but seize it.

Nic Carter, who no one can accuse of being tepid on bitcoin, warns that "if it's a choice between buying 1 million BTC at $1 million/coin (for $1 trillion), or simply confiscating 1 million coins through some other method, they will go for the more efficient method."

Similarly, the bitcoin-friendly business professor Austin Campbell warns that "as soon as you concede bitcoin is a strategic asset, you're conceding that the US has a strategic interest in controlling bitcoin."

If that sounds conspiratorial to you, ask yourself why Treasury Secretary Bessent expressed the administration's preference that bitcoin mining be brought onshore.

I can't imagine it's to protect your financial privacy or ensure your access to censorship-resistant money.

Bitcoin enthusiasts are understandably celebrating the SBR because it feels like a validation of their long-held views on financial privacy and non-sovereign, censorship-resistant money.

But it also feels like we've spent less time thinking about whether the SBR is good for taxpayers — or even for bitcoin itself.

Bitcoin is so far strategic in name only — but if it's ever genuinely so, "Government BTC" might soon come to mean "all BTC."

The strategic bitcoin reserve is a success that might someday feel like an enemy.

— Byron Gilliam

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