The News
Even cryptocurrency backers haven’t fully bought in to President Donald Trump’s latest plan to boost digital assets.
The president sent the multitrillion-dollar crypto market soaring Sunday by announcing he’ll create a US “strategic reserve” of digital assets that includes Bitcoin and Ethereum, as well as more niche tokens like Ripple’s XRP, Solana’s SOL and Cardano’s ADA. Because Trump previously backed a Bitcoin-only stockpile — which wouldn’t require the government to buy new crypto — his shift caught some pro-crypto lawmakers and industry allies off-guard.
Now, Republicans and Democrats who hope to legitimize crypto by pushing regulatory overhauls through Congress are scrambling to come to terms with Trump’s proposal. Private-sector supporters are raising their own concerns that the reserve plan cheapens their ongoing effort to sway the Hill.
And experts warn that creating a reserve, as opposed to a narrower stockpile, would likely require congressional approval.
“I don’t mind the concept. I just don’t know what utility it serves,” Sen. Thom Tillis, R-N.C., told Semafor. “And I don’t like the fact that law enforcement could be negatively impacted in terms of future flows for asset forfeitures,” he added, by having to turn over government-seized crypto.
The skepticism about Trump’s reserve pitch comes ahead of the White House’s much-touted crypto summit with industry leaders — and just as Congress nears a potential breakthrough on bipartisan legislation that crypto players have long sought. The Senate Banking Committee is eyeing a vote next week on a Republican bill that would create rules for stablecoins, or tokens pegged to assets like the US dollar, a person familiar with the plans said.
And Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., are actively exploring how to attach their proposed overhaul of crypto income taxation to Republicans’ party-line tax plan, Gillibrand said. But she warned that Trump’s reserve announcement is “unhelpful — deeply unhelpful” to those talks.
“What President Trump proposed was very dangerous and very problematic,” Gillibrand, one of the crypto industry’s most loyal allies, told Semafor. She added that buying tokens like XRP and SOL is like proposing the government purchase stock in a publicly traded company.
Much of the pushback has come from within the industry itself, where there’s bristling at Trump’s apparent willingness to elevate certain tokens but not others — as well as the possibility that the US could acquire enough crypto to begin to manipulate the market. The latter could approach the creation of a de facto central bank digital currency.
“For Bitcoin, I think people generally understand that this is the most decentralized — it’s very clear that no one person owns it, it’s very clear that no one person is making decisions or this is benefiting any one entity,” one industry representative told Semafor. “But the further you get down the stack, the more complicated it is.”
Tillis raised his own separate question about the core purpose behind the plan: “It’s not like we would rely on Bitcoin currency,” he said. “We have petroleum reserves for a reason — for an obvious reason. I don’t know how that maps into this.”
The White House declined a request for comment.
In this article:
Know More
The debate over the reserve is just getting started. Commerce Secretary Howard Lutnick told reporters Tuesday that Trump would reveal more details at the White House event on Friday — including how “the other crypto tokens will be treated differently” from Bitcoin.
“I’m in close contact with the administration on digital assets legislation and I look forward to hearing more from them about their plans,” Senate Banking Chair Tim Scott, R-S.C., told Semafor.
Lummis, who introduced a bill last year that would create a Bitcoin reserve, said at an event last week that she doesn’t see enough momentum yet to advance it. She’s planning a meeting next week with crypto representatives to discuss the proposal, a person familiar with the plans said.
“We’re now identifying offices on both sides of the aisle … that we can go sit down and have the conversation with, from start to finish,” Lummis said at the event. “That takes time.”
Meanwhile, the bipartisan stablecoin bill faces several hurdles beyond Trump’s new reserve proposal. The House has taken a different approach than the Senate when it comes to state regulatory frameworks, and there are fault lines within the industry, as firms like Circle and Tether advocate for policies that benefit them specifically.
Even as Sen. Elizabeth Warren, the top Democrat on Banking, marshals resistance to the legislation, senators in her party on the committee’s crypto panel are open to a deal. Sen. Ruben Gallego of Arizona said Democrats could get behind the stablecoin bill if Republicans agree to stronger language around enforcement and transparency.
But he aligned with Gillibrand in saying Trump’s reserve announcement has complicated those talks.
“There was an opportunity for us to think about this thoroughly, to study it, do it in a bipartisan manner … but the fact that he moves this fast actually makes it harder,” Gallego said.
Gallego won his seat last year with the help of a powerful crypto super PAC known as Fairshake. Another industry ally on the Banking panel, Sen. Andy Kim, D-N.J., said he’s also requesting changes to the stablecoin bill’s consumer protection and illicit finance provisions.
“I ultimately want to see this technology proliferate and innovate, but we’ve got to make sure that we’re not creating something that’s going to allow for predatory behavior,” Kim told Semafor. “Those are things we need to make sure we’re fighting against.”
Eleanor’s view
For now, crypto’s willingness to spend big in the 2024 elections still seems to be paying off. Eighteen Senate Democrats plus independent Sen. Angus King of Maine voted this week to overturn a Biden-era IRS rule that required crypto brokers to report their transactions.
“We had a strong bipartisan consensus,” Sen. Ted Cruz, R-Texas, who penned the reversal, told Semafor.
But Sunday’s announcement from Trump exposes the industry to more criticism just as its legislative wish list appears within reach.
“Trump’s willingness to exploit crypto to enrich himself, reminds everyone who this industry has gotten into bed with, and it doesn’t look good,” Warren told Semafor.
Room for Disagreement
Some crypto-friendly senators see no problem with Trump’s reserve proposal.
Like Gallego, Republican Sen. Bernie Moreno won his Ohio seat with the help of Fairshake. He told Semafor that he doesn’t think Trump needs Congress to make it happen — and that it’s a net positive for the US to be able to control the crypto market.
“The fact that the US can control a decent amount of the top crypto markets just staples those markets as legitimate and makes those assets rise,” Moreno said. “We would end up being almost a market-maker, which benefits America.”
Moreno and Cruz both argued that resistance from pro-crypto Democrats has more to do with Trump than the underlying policy.
“They’re literally totally irrational,” Moreno said. “So we’re just going to plow through their emotional temper tantrums.”
Notable
- Tether and Circle’s battle to the death over crypto regulation extends far beyond the stablecoin bill, as the Wall Street Journal reported this week.
- WIRED spoke with industry representatives who suspect that Trump chose the tokens for his reserve based on money he received during last year’s election.
- POLITICO has a look at how even Trump’s own digital assets weren’t immune to the fallout from his tariffs.
Kadia Goba contributed.