Donald Trump provoked a riot of cryptocurrency trading and accusations of favoritism on Sunday after identifying several coins that may feature in a future US strategic crypto reserve. Alongside bitcoin, Trump said that XRP, Solana, Cardano and Ether will be considered for inclusion.
“A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration, which is why my Executive Order on Digital Assets directed the Presidential Working Group to move forward on a Crypto Strategic Reserve that includes XRP, SOL, and ADA,” wrote Trump in a Truth Social post on Sunday.
“And, obviously, BTC and ETH, as other valuable Cryptocurrencies, will be the heart of the Reserve. I also love Bitcoin and Ethereum!” he added two hours later, perhaps to appease the tribes he had forgotten to toast.
An executive order signed by Trump in January had already specified that cryptocurrencies other than bitcoin would be included in the reserve, but the president had not previously identified which coins were under consideration. (The administration has not yet confirmed how large the reserve will be, or where coins will come from.)
Seizing upon this morsel of new information, crypto traders piled into the coins singled out by Trump, leading to a sharp but temporary bump in price ranging from 9 to 65 percent. The coins have mostly since returned to roughly the same price as before the announcement.
In crypto circles, meanwhile, the question became: Why had Trump chosen these particular coins? The case for a bitcoin reserve is predicated on the already-shaky assumption that the ever-rising price of bitcoin will offset losses in spending power caused by inflation. But what makes these other coins—many of which have very volatile pricing—“strategic”?
The White House press office did not respond immediately to a request for comment.
Some members of the crypto industry, especially bitcoiners, suspect that Trump’s decision-making was colored by the sums of money thrown by particular crypto businesses at the 2024 US election.
In the runup to the election, crypto businesses funnelled more than $150 million into super political action committees set up to support pro-crypto congressional candidates, many of them Republican. Among the most generous donors were cross-border payments company Ripple, whose services rely on XRP, venture capital firm a16z, which has previously invested in Solana, and software company Consensys, run by one of the Ethereum cofounders.
“In the end, I believe the government will come to understand that it makes no sense to include one company’s token over another in a strategic reserve. Only Bitcoin has no company to oversee it, and is above the bar to be evaluated as a strategic asset,” claims Cory Klippsten, founder of bitcoin-only trading platform Swan Bitcoin. “If politicians absolutely must pay back the favors from the last election cycle to their crypto industry donors, perhaps they can add altcoins to a sovereign wealth fund.”
If the US government were to purchase large quantities of the coins to populate the reserve, the price of each is likely to rise. In that regard, their inclusion in the stockpile “looks very much like a government subsidy,” says Patrick Hillmann, former chief strategy officer at crypto exchange Binance. But the preferential treatment is warranted, he argues, in light of the hostile treatment of US crypto businesses by regulators under the Joe Biden administration.
