Donald Trump’s decision to establish a strategic crypto reserve has triggered strong reactions from investors, political figures, and market analysts. While his supporters see it as a step towards making the US the Crypto Capital of the World, critics warn it could lead to legal challenges, investigations, and economic instability.
The announcement immediately impacted crypto prices, with Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA) experiencing significant price surges. However, concerns over the use of taxpayer funds, regulatory issues, and political implications continue to grow.
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Trump’s Crypto Reserve Announcement
On Sunday, Trump took to Truth Social to announce his executive order, directing the formation of a Crypto Strategic Reserve. He listed five cryptocurrencies—BTC, ETH, XRP, SOL, and ADA—as key components of this initiative.
Figure 1: On Sunday, Trump announced on Truth Social that he had signed an executive order to establish a Crypto Strategic Reserve, naming BTC, ETH, XRP, SOL, and ADA as its key assets. [Meta AI]
“A US Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration … I will make sure the US is the Crypto Capital of the World,” Trump posted.
The crypto market responded immediately, with XRP price surging by 34%, Cardano jumping 63%, and Bitcoin gaining over 10% overnight. The move helped reverse a recent slump caused by regulatory crackdowns and investor uncertainty.
Despite the market optimism, questions remain about how the reserve will function and whether it requires Congressional approval.
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Investor Concerns Over Trump’s Crypto Move
Investor Jason Calacanis, a well-known angel investor and tech entrepreneur, criticised the move, calling it a “terrible idea” that could derail Trump’s second term.
“It’s a terrible idea to spend taxpayer money buying the crypto bags of the people who donated many millions to him,” Calacanis said.
He warned the initiative could lead to “endless investigations” into how much crypto companies donated and whether insider deals influenced the decision.
Instead of focusing on crypto, he argued that administration should prioritise fiscal responsibility, immigration reforms, and economic policies.
Market Impact: Crypto Prices Surge
Trump’s endorsement of cryptocurrencies triggered a major rally in the crypto market.
- XRP price in USD rose by 1% in 24 hours.
- Bitcoin price in USD climbed 8% overnight.
- Cardano saw the biggest spike, gaining over 63%.
- Solana and Ethereum also posted double-digit gains.
Ethereum’s Price Surge
Ethereum (ETH) saw a significant price jump following Trump’s announcement.
- ETH is currently valued at A$3,932.11.
- It has increased by 0.2% in the last hour and 9.7% in the past 24 hours.
- ETH’s value is still 7.7% lower compared to last week.
- The 24-hour trading volume of ETH stands at A$64,115,323,934.
Crypto trading platforms like Coinbase reported higher trading volumes, suggesting renewed investor interest. However, analysts remain cautious about the long-term impact of Trump’s plan.
Political and Legal Risks of Trump’s Crypto Move
Democratic Congressman Sam Liccardo has vowed to introduce the Modern Emoluments and Malfeasance Enforcement (Meme) Act, which would regulate politicians launching crypto projects.
He accused Trump and his wife, Melania, of financially exploiting the public through their recently launched meme coins.
“The Trumps’ issuance of meme coins financially exploits the public for personal gain, and raises the spectre of insider trading and foreign influence over the Executive Branch,” Liccardo told ABC News.
Meanwhile, the US Securities and Exchange Commission (SEC) stated that meme coins like those launched by the Trumps are not subject to federal securities regulations. This could shield them from potential legal action.
Elon Musk’s Role in Trump’s Crypto Push
Trump’s crypto-friendly stance aligns with Elon Musk’s long-standing support for digital assets. Musk, a key Trump ally, has frequently promoted cryptocurrencies on his social media platform, X (formerly Twitter).
As part of Trump’s government efficiency drive, Musk’s influence on crypto policy and digital asset regulations could grow. However, his involvement could also lead to increased scrutiny from regulators and lawmakers.
Uncertainty Over the Crypto Reserve’s Future
One major concern is whether the creation of a crypto reserve requires Congressional approval. Trump’s executive order did not clarify how the reserve would be funded or managed.
Some experts argue the US government could seize crypto assets through law enforcement efforts and store them in the reserve instead of buying new assets with taxpayer money.
Calacanis suggested an alternative: “We can just TAX crypto and put that money in a USCR. Then you don’t have to TAX AMERICANS to buy the bags of the crypto people who donated a HUGE amount of money to Trump.”
Upcoming Crypto Summit and Next Steps
The administration plans to host a Crypto Summit on Friday at the White House. The event is expected to provide further details on how the crypto reserve will work.
While crypto supporters welcome Trump’s pro-crypto stance, critics argue that it distracts from more pressing economic and political issues.
As the 2024 US presidential election approaches, crypto policies could play a key role in shaping voter sentiment, regulatory policies, and market trends.
