The prospect of using taxpayer money to stockpile cryptocurrencies in a national reserve has drawn criticism from lawmakers and investors.
The crypto market gives and takes: After President Trump’s plan for a national crypto reserve drew backlash from both Republicans and investors, the prices of digital tokens that would be involved soared higher — and then tumbled. (Bitcoin was trading at about $83,800 early on Tuesday, down nearly $10,000 from a day ago.)
The plan has spurred a lot of questions about how it would work and the risks that would be involved.
How would a national reserve work?
Mr. Trump campaigned last summer on creating a federal Bitcoin stockpile and appointed the venture capitalist David Sacks as his crypto czar. Advisers have suggested holding on to any Bitcoin the government has already seized from criminals, recently estimated at about $17 billion.
A bill proposed by Senator Cynthia Lummis, Republican of Wyoming, would direct the government to buy about 200,000 Bitcoin a year over five years, for a value of about $90 billion. (To help pay for that, the bill proposes taking $4.4 billion out of the Federal Reserve’s surplus, cutting into the Treasury Department’s coffers.) Of course, the digital token’s prices would probably rise in anticipation of those federal purchases.
One unknown is whether Mr. Trump, in the face of divisions among Republican lawmakers on the idea of a reserve, would seek to test legal limits on his authority and create one unilaterally.
Would taxpayer money be involved?
That prospect drew the most criticism. Joe Lonsdale, a financier and Trump supporter, said it was “wrong to tax me for crypto bro schemes.” Another investor called the proposal an “unforced error” that would “enrich the insiders and creators of these coins at the expense of the U.S. taxpayer.”