According to Matt Hougan, chief investment officer at Bitwise Asset Management, the US government’s creation of a Strategic Bitcoin Reserve reduces the prospect of Bitcoin ever being subjected to an outright ban.
Hougan argues that the reserve also significantly boosts the probability that other countries will follow suit and establish their own strategic Bitcoin reserves.
1) Dramatically reduces the likelihood the US government will some day “ban” bitcoin;
2) Dramatically increases the likelihood that other nations will establish strategic bitcoin reserves;
3) Accelerates the speed at which other nations will consider establishing strategic bitcoin reserves, because it creates a short-term window for nations to front-run potential additional buying by the US;
4) Makes it much harder for institutions — from national account advisor platforms to quasi-governmental agencies like the IMF — to position bitcoin as somehow dangerous or inappropriate to hold.
Moreover, institutional resistance to Bitcoin, particularly from entities like national advisory boards or the IMF, could weaken substantially. Hougan suggests the reserve’s existence makes it more challenging to portray Bitcoin as inherently dangerous or unsuitable for investment portfolios.
Criticisms of the Bitcoin reserve
I have recently highlighted contradictions inherent to the reserve. To me, it’s paradoxical to champion Bitcoin as a safeguard against government intervention and also celebrate it becoming a tool of state influence.
I believe that the Bitcoin reserve being solely acquired through government seizures complicates the narrative.
Without active government purchasing, the US reserve essentially showcases confiscated Bitcoin under a new owner. I expected a Bitcoin reserve to include government purchases or mining of Bitcoin.
A US government Bitcoin mining and HODL project would be far more impactful and beneficial for US Bitcoiners.
So, I ask myself, would Satoshi view this ‘reserve’ as a good thing for Bitcoin?
Despite these concerns, Hougan makes some excellent points.
The US may legitimize Bitcoin globally by institutionalizing Bitcoin holdings, even through seized assets. It may be more challenging for the IMF to impose restrictions on countries like El Salvador buying Bitcoin when the US has an official Bitcoin reserve.
With the new reserve, nothing materially changes with the Bitcoin held by the US. It is currently custodied by the US Marshall Office; now, those keys will be held by the Department of Treasury. That small change may have an outsized impact on Bitcoin’s global perception, though. It definitely changes the narrative somewhat.
Though we must also weigh this against the alignment of Bitcoin and President Donald Trump, an unpopular figure outside the US, especially in Europe.
Thus, the legitimacy of a Bitcoin strategic reserve may be tempered by a desire to fight back against Trump-backed policies. Ultimately, Bitcoin could be negatively impacted by association.
Regardless, while the reserve is essentially a wallet rebrand, it does add legitimacy to Bitcoin simply because it’s held with the Treasury.
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